GT Leasing offers its clients a timely fleet management tool – The Sale and Leaseback Option.
Growing businesses often find themselves with large amounts of cash unproductively locked up in their fleets. The Sale and Leaseback option enables businesses to free up the trapped capital and use it more efficiently in G&A items that are more difficult and expensive to borrow against. This is an efficient technique that enables you to inject cash directly back into your business, improving cash flow and removing liabilities from your balance sheet, while gaining access to a professional fleet management team.
This exercise often raises cash, even for fleets that are currently financed at a bank or leasing company, by renegotiating lower interest rates and/or lengthening near-end-of-term leases or installment contracts.
This process also allows for an assessment of your fleet, and if necessary, disposal of any vehicles deemed unnecessary or obsolete. If necessary, we can then replace the unwanted vehicles with other new or used units that will better fit your needs.
GT Leasing’s Purchase and Leaseback Plan follows the process outlined below. Our transport managers, who average 16 years of service with our company, handle the end-to-end process quickly and professionally.
1. We sit down with you and review your existing fleet.
2. We purchase the agreed upon vehicles from your fleet.
3. We give your business a cash injection to the value of your vehicles that we purchase.
4. We assist with the disposal of any aged vehicles and purchase new ones, if needed.
5. We leaseback your existing vehicles with no disruption to your business.
How do you put a sale and leaseback deal into action?
The first step is to bring together all of the essential information about your fleet – mileage, registration dates, exact model(s), and general condition.
From here, GT Leasing will determine a valuation of your vehicles. GT Leasing will then make an offer for your fleet and a leasing proposal that are based on mileage, duration of the term, and the estimated future value of the vehicle. As with a traditional lease contract, you pay the difference of the current value and the future (residual) value in monthly installments.
Once we reach an agreement, the buyer will write you a check for the titles. You then start to make your monthly payments and your sale and leaseback deal is underway.
What are the pros and cons of sale and leaseback?
There are many incentives that encourage companies to consider sale and leaseback deals:
1. Immediate cash injection – The fleet sale enables you to put money into other projects.
2. Seller remains in day-to-day control of the vehicles sold.
3. Improvement of balance sheet through the sale of fixed assets.
4. A Simpler budgeting process – a lease contract will set fixed monthly payments.
5. New for old – Through the sale and leaseback option, you establish a leasing supplier going forward, a benefit that allows you to replace the vehicles with new vehicles at the end of the term.
6.In exchange for the agreed upon cash in the sale – you transfer ownership of the vehicles.
Is a Sale and Leaseback option right for you?
Any company requiring an immediate cash injection should consider sale and leaseback as an efficient alternative to using lines of credit from banks that are currently reluctant to make loans to small and medium-sized businesses.
The Sale and Leaseback option often raises cash, even for fleets that are currently financed at a bank or leasing company, by renegotiating more favorable rates and terms.
Furthermore, you now have access to a professional fleet management team for disposals and replacements as required.
If you think that “Sale and Leaseback” could be the right strategy for your company, please call or email us.