If you are a business owner, it may be essential for you to have at least one company vehicle to help run your daily operations. However, it’s always a challenge to find ways to cut down on your expenses efficiently so you may have a difficult time choosing whether to buy or lease a car.
Now, if you are considering both options for your business, you should think how long you plan on keeping the vehicle, how much capital you have, among other things.
While both options have their own pros and cons, ultimately, you still have to decide which option is better for your business. But if you are leaning towards getting a good deal and saving more money, then you should consider leasing for many compelling reasons.
How much money are you willing to spend?
If you don’t have a lot of cash on hand or just don’t want to spend a considerable amount of money, then leasing is an excellent option for you. One glaring benefit you can immediately take advantage of is the lower deposit amount and monthly payments.
Some leases don’t even require you to make a down payment while most car loans do. Also, your cash is not tied up on your company vehicle, which means you can still use your resources on other things needed to run your business.
How long will you keep using it?
Many business owners and employees can accumulate plenty of miles on any given company car. So, this is one key factor you should consider. It is better to return your vehicle sooner rather than later. This means opting for a lease is more beneficial for your business. In case, you decide to keep the company car for long, then the smart choice for you is a car leasing with rent to own option.
Consider the tax benefits.
You can gain a substantial reduction in the amount you pay in taxes when you opt to lease. Monthly lease payments fall under business expenses so they can be qualified as tax deductions. Also, leasing agreements can allow your business to pay VAT on the rental amount, not the actual price of the car, which means your business can save more money.
Think about the upkeep.
It’s no secret that maintaining your company vehicle is costly, but you have no choice but to keep it in tip-top shape. However, if you lease, the maintenance is usually included in your lease agreements, and this is one stressful thing you don’t need to worry about.
Depreciation over time.
Many owners know that the value of their cars reduces significantly over time. Once you decide to buy a brand-new car today, you can quickly lose a quarter of its total cost the next day. Due to wear and tear, as well as newer models that come out of the market, you can’t expect to get the same amount on your investment. So, once your lease on the vehicle ends, you can easily dispose of it and no longer have to worry about selling it.
As a business owner, you should always consider many factors, such as cash flow, taxes, and other issues, before deciding on whether to buy or lease a new vehicle for your business. You can do further research, see what benefits you can get for your business, and determine how you can get the most bang for your buck. We hope the options above will help you avoid any cash flow problems or issues with your company car in the future.
Over to you.
We’d love to hear from you. What are the most critical factors you need to consider for your business before deciding on acquiring a company vehicle? Which option will suit you best – buying or leasing? Why? Let us know in the comments section.
Author: Oliver Curtis
Hi there. I’m Oliver. I’m just a young boy from the outskirts of… Okay, that’s a lie, I’m not a young boy anymore, although I certainly feel that way at heart.