Upgrading government fleet vehicles with minimum cost

Government departments and businesses are under scrutiny more than ever with higher costs of living and inflation rising. Extravagant purchases by government don’t go over well with the public — so keeping costs down when you need fleet vehicles is a must. With the push for Net Zero carbon emissions and collaborations with industry on Electric Vehicles (EVs) rising, how can you upgrade your fleet vehicles without breaking the public purse?

Getting vehicles up to standard

Fleet buying cars (Federally) has four main requirements — that the vehicle has a five-star ANCAP safety rating; meets the minimum fit for purpose requirements; provides value for money; and addresses environmental considerations. Newer vehicles tend to tick all these boxes, especially when it comes to the ANCAP rating. Newer models have lower emissions — or are zero emissions, like electric vehicles — have greater fuel economy, last longer than used models, and are not considered ‘sports’ or high performance vehicles. However, these can be difficult to procure in mass quantities, due to supply chain issues.

In some circumstances, you will not have to lease vehicles from the SG Fleet but purchase your own — which may be ex-fleet vehicles.

Ex-fleet vehicles — a consideration

Ex-fleet vehicles from SG Fleet or a state government fleet may be a good option. These may be relatively late model cars that tick all the boxes when it comes to procurement. Since they are ex-lease vehicles, they are kept and maintained in as good a condition as possible. Best of all, you can purchase them and have them operational within days — and they’re cheaper than equivalent new cars. Remember, reducing time also means reducing costs.

Chattel mortgages and hire purchases

As semi-autonomous government departments or government-owned businesses, you are eligible to gain finance for your new fleet of vehicles and to use chattel mortgages as an auto loan.

The vehicle you buy serves as security for any chattel mortgage. In the unusual event that they must be sold off to pay losses, they provide a safety net for the lender. But the main benefit of security is that it significantly increases your borrowing capacity and lowers your interest rate. (Though as a government business, this is usually not that big a problem!)

A business may borrow more than the car’s value to cover future registration, insurance and other road expenses. You may also claim the GST, interest and depreciation paid.

Balloon payments are a structural option for both. These loans are also good options for fleet buyers as you can purchase many vehicles in one loan facility. You may even buy ex-fleet vehicles with chattel mortgages.

Hire purchases are functionally identical to chattel mortgages, except where ownership lies — in this case with the bank or lender until the loan is paid off.

Bare bones or fully featured?

Many fleet vehicles can be bare bones — they may not have a sound system, electric windows or even air conditioning. If you are buying an entire fleet of cars, be sure that they have the features your department needs to keep comfortable. You should also check if the car has had its major service close to what’s on the odometer — because that’s something you’ll have to pay for if it’s missed one.

Image credit: iStock.com/Tramino