4 October 2016

Folding car lease options into employee benefit packages


Both car dealerships and businesses that lease vehicles for employees stand to benefit from looking at flexible lease models. In particular the model of transportation as a service for car lease options. The option to lease a car is an attractive benefit to add to an employee’s compensation package. It’s not so attractive if the business has to adhere to rigid dealer agreements for car leasing. Examples would include contracts that force employees to work with specific dealers or lease specific makes and models.

Problems start when you make the employer responsible for shepherding employees to specific dealers and holding all responsibility for actual lease arrangements. Sure, the business has more control over where money is going, but it’s a lot of work. In addition, employees are limited to specific offerings that might not meet their preferences for transportation. Here’s a brief look at a more flexible model that all parties might like.

Getting creative about transportation as a service for employee car leases

There are several ways to work flexibly with approaches to making cars available to employees that benefit everyone involved. Neither dealers nor businesses need to go to a full-blown services model; all that’s needed are more choices.

Businesses can ask “What lease options will make employees happy?” The answer is likely to be that different employees want different things:

  • If they’re on the road a lot, they may look for maximum comfort and appeal. Driving a nice car is important to them.
  • If they’re looking for practical transport, they might be fine with a vehicle that gets the job done, no frills.
  • Employees might even be interested in sharing a car. Arrangement here could be more complex, but here’s where looking at transport as a service makes such an option viable.
  • An employee may want to upgrade what the employer’s willing to make part of the lease option. Or use part of the funds allotted for different purposes. This could start as small as a bike or be unrelated to transport.

The smoothest ride for businesses creating packages for employees is to offer them funding to lease a car. Give them a list of dealers they work with, and the rest is up to the employee. They can choose to spend exactly the allotted amount on a vehicle. Or decide they’d like a higher-end ride and fund the remaining costs themselves. In addition it saves money which gives room to spend it somewhere else. Especially if they choose a frugal driving option, or perhaps engage in a shared arrangement.

Result: Freedom of choice, satisfied employees, opportunity for car dealers

In this scenario, it’s the employee’s responsibility to take care of lease arrangements and pay monthly bills. Furthermore, they ensure the car or vehicle is properly serviced. There are cases where businesses still may serve as guarantor, or that may be responsibility of the employee. Regardless choice, the employer is not responsible for the bulk of paperwork and payments. Here’s where dealers and businesses need to come together to work out what arrangement combines flexibility and peace of mind.

For car dealers, there’s benefit to engaging with businesses. This way you create lease package options that still will attract employees as customers, without locking them into restrictive choices. For businesses, there’s benefit in opening up flexibility that makes individual employees happy. It frees business owners from treating car leasing as an onerous business task.

Michiel Toppers,
Michiel Toppers,
Senior Director of Product Management

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