Problems Leasing Vehicle Tracking Systems

At a time when the benefits of vehicle tracking are more important than ever, it has become more difficult than ever to buy. The reluctance of lenders to provide SME’s with the lease finance they need to purchase vehicle tracking systems is preventing many businesses taking advantage of them.

The many benefits of vehicle tracking which include reduced operational costs and increased productivity have made vehicle tracking systems more popular than ever, and tracking companies are reporting sales significantly up on 2008 despite the economic downturn and the difficulties in obtaining leasing.

Simon Taylor from TrackCompare explains “Because of the mixture of hardware, software and airtime costs vehicle tracking lease deals usually work on a ‘lease rental’ basis. This is good for the customer as there is usually no deposit to pay and all the payments are wrapped up in one monthly fee, however from lenders perspective there is little tangible value to recover should the customer fail to pay. Even companies with good credit scores who have had no problems leasing other equipment are being refused credit.  If the business has a good credit score and a healthy balance sheet they should be fine”.

So what options ar there for SME’s struggling to get leasing on a vehicle tracking system?

Self Financing:

If the SME has the funds they may be able to full or part finance the system themselves.  With all vehicle tracking systems there is a fixed hardware and installation cost followed by the monthly costs of the software and data.  If the customer is able to part finance the system most vehicle tracking companies will offer a monthly payment option for the software and data only, most companies will accept between 20% and 30% as an upfront payment. 

Other Financing Methods:

In all cases existing relationships with lenders should be considered.  Often banks will be more flexible with lending all or part of the funds required and often at a lower rate of interest which is typically around 17% for leasing *.

‘Pay As You Go’ Tracking Systems:

Some vehicle tracking companies now offer ‘Pay As You Go’ options, these generally attract a small upfront deposit of around £100 per vehicle followed monthly payments, these start at around £20 per vehicle per month.  This method of buying a vehicle tracking system is very flexible however can be expensive in the long term when compared to other options.

Vehicle Leasing:

If a company buys it’s vehicles using leasing, the cost of a tracking system can often be included within it.  This should be considered prior to purchase and is normally arranged through the dealership.

* Typical rate at time of publication.