Consider this; business is booming, and you’ve finally decided to acquire a company vehicle. One conflict; you’re not sure whether you should lease or purchase a car.
As a business owner, your first priority is to ensure your choices help you enhance your business’s operations and cut expenses. Thus, before you lease or buy a vehicle, you must do in-depth research. You should know the advantages and disadvantages of the process to make a more informed decision.
The Pros of Leasing a Vehicle
Here we discuss the top benefits of leasing a vehicle for business:
One fantastic benefit of leasing a car is low costs. The initial amount you’ll pay for renting a car will be comparatively lower than the down payment necessary when purchasing the same vehicle.
What’s more? The monthly lease payments will be less as well. You can also enjoy tax benefits if your business uses the car for business purposes 50% of the time.
Since leasing a car helps you save money, you can use it to grow and expand your small business.
Anotherbenefit of a car lease is that you won’t have to worry about extensive paperwork. The dealer and finance company will take care of it.
In addition, you don’t have to worry about depreciation. Once you reach the termination of your contract, the vehicle will simply be handed back.
When leasing a car, you can enjoy flexible contracts. Choose between 24 to 48 months contracts and decide whether you want to include maintenance and servicing according to your convenience.
The Cons of Leasing a Vehicle
Let’s discuss the downsides of leasing a vehicle for your business:
Expensive in the Long Run
The fact is that leasing a vehicle is a great way to save money in the initial stages. Your leased car will likely cost you a lot more in the long run.
Plus, you will have to decide a certain amount of mileage. In case you go over the amount, you will have to pay additional charges.
In addition, if you wish to end your contract early, you may have to incur charges. You’ll also have to worry about extra charges if you fail to return the vehicle in a well-maintained condition.
One other downside of leasing a car is that you’ll boast no ownership rights. Thus, when your lease cycle comes to an end, you’ll have nothing to show for the money spent.
Leasing a car comes with various limitations. These may include:
- Certain lease agreements restrict consumers from customizing the vehicle. It may make it challenging for you to boost your company’s culture
- In case your lease agreement allows you to customize the car, you’ll have to spend money on repainting the vehicle
To Sum it Up
With the help of fixed and manageable monthly payments, a small business can easily manage cash flow and drive a car that fits its budget.
Plus, you can enjoy several tax benefits, such as reclaiming 50% of the VAT on the monthly rental costs depending on your car’s CO2 emission.