As a business owner, saving up for a new vehicle for commercial use can be absolutely, and unnecessarily, stressful. You have the decision to spend your hard-earned cash on a company car, or you can lease the vehicle with the option to buy out your lease at a later date; either way, you get a safe, reliable vehicle to use for business purposes, but the lease vs buy question still lingers. Below youâ€™ll find some tipson how to make this decision process easier, and youâ€™ll see that leasing may be the better option when it comes to your new company vehicle.
Business owners know too well that running a business is costly, so adding more costs to a long list of expenses is something that most owners would rather avoid. Buying a car outright will see you back at least a couple thousand and your payments may be larger than what you can afford if you took a loan out with the bank to pay for the car. It is well known that the value of the car decreases steadily throughout the years that you own it, but youâ€™ll still be stuck paying the loan based on the value of the vehicle when you first purchased it.
Leasing, however, has minimal monthly or biweekly payments that differ depending on the kind of vehicle that you choose. The Tilsun Group, a car leasing company out of the United Kingdom, offers car leasing from just $180 monthly (Â£106.79)â€¦ a much lower price than what some car loan repayments would require. Some loans and, obviously, if youâ€™re buying a vehicle, require you to put a substantive down payment on the car, but most leases donâ€™t require a down payment whatsoever. You wonâ€™t have to put up more money than your business can afford as the monthly lease payments are competitive and affordable, so your business will be able to budget for these small costs more effectively.
If youâ€™re a small business owner, a corporate mogul, or youâ€™re just starting out with your business, you likely do not have the cash readily available to buy a company car outright, so youâ€™ll probably be getting a loan from the bank if youâ€™re not thinking of leasing.
The problem with loans, aside from the large repayments, is the interest can be exponential and you can only write off the interest that youâ€™ve paid for tax purposes (depending on your state). Lease payments can usually be deducted in their entirety, though some states will deduct in concerns to the percentage of mileage used for business purposes.
It is always a good idea to keep up your vehicleâ€™s maintenance, whether it is for a routine oil change or tire balancing, or for something a bit more intense like a thorough engine cleaning. Most leases require you to have regularly scheduled maintenance trips, and you can even pre-schedule them with the car dealership that you are leasing the car from if the dealership offers this service. Car leasing companies often offer leases with maintenance cover, meaning that the amount of your lease payments may go up, but you will be covered on any unexpected cost increases for any of the following standardmaintenance expenses:
- Routine maintenance (as per preset manufacturer requirements)
- Mechanical or body repairs
- Car necessities (tires, batteries, piping, fluid, etc.)
- Towing costs or onsite battery replacement
As this cover will differ depending on your leasing company and the leasing contract, you should always be sure to read the fine print before you sign on the dotted line.
Decision Process Made Simple
The decision is, of course, entirely dependent you as the business owner whether you want the small, easy payments of leasing or the more complicated, often larger expenses of loaning a vehicle or making up for the amount that youâ€™ve spent to buy the vehicle outright. Leasing a car gives you more flexibility and more breathing room in regards to your finances, though you should always consider every option available to you and go with what works best for your business.