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Lease vs. Buy
Under the right circumstances, leasing vehicles under VPSI‘s Capital Lease Program can offer public transit agencies significant benefits:
Leverage
It is possible to acquire a greater number of vehicles through a lease arrangement than a purchase because the cost of leasing is spread over time. The primary disadvantage of purchasing outright is the enormous amount of capital that is tied up, unavailable for use, for other investments. By converting a large capital expenditure for purchase of vehicles to a smaller periodic expense, the public transit agency preserves flexibility in the use of its resources.
Flexible Lease Terms
We recognizes that in a government funding situation, it may be necessary to both allow for the avoidance of long-term debt (which usually requires an involved set of procedures, sometimes including voter approval) and the possibility that the agreement is limited by the need to appropriate funding on an annual basis - which may not occur in a subsequent year. Accordingly, a VPSI Master Lease Agreement is used, which includes a Non-Appropriation or fiscal funding out clause. This provides for cancellation of the agreement at the end of one current appropriation period if the public agency fails to appropriate funds for lease payment obligations.
Meet Supply Needs
When leasing the vans, the number of vehicles supplied can increase or decrease depending upon the actual number of vanpools formed. No vans (purchased) will sit idle until groups are formed. Further, leasing enables the correct van to be supplied to match the size of the vanpool group. Groups can, within reason, be moved into larger or smaller vehicles as needed. Conversely, when purchasing vans the seating capacity is determined months ahead of the group formation process which could result in a mismatch of vehicle needs and the existing vehicle supply.
