Business Vehicles: 5 Reasons Leasing is Better Than Buying

Depending on the line of your business, you may need a vehicle to operate. In acquiring one, the number one decision you need to make is whether you should buy or lease it. Well, you are in luck, as this article will give you something to ponder upon.

Running a small business, I’m sure you understand that you need to make the most of your limited cash reserves. There are plenty of expenses to cover and the best way to do it is by prioritizing.

business vehicle lease
photo credit: Chris Devers via photopin cc

Business vehicles should sit high in one business niche, but not a priority in another. In either way, you need to decide whether you should lease or buy the vehicles.

If you asked me, I’m inclined toward leasing business vehicles, for some reasons – here they are to make my point.

5 benefits of leasing vehicles

1. I should focus on other more urgent expenses

When considering on making a business purchase, including a truck or car to support your business operations, it’s only natural that you should be looking for an economic option.

If you have limited cash reserves, leasing a vehicle is a logical solution for you. Instead of purchasing a vehicle and pay for it in full, It’s better for you to lease it and focus on covering operational costs which make your business in operation, literally – paying your suppliers, paying for utilities, and so on. Even when you purchase a car with loans, leasing offers lower monthly payment than car loan payment with the same loan terms.

2. Depreciation is not an issue for you

Depreciation is one of the posts in your report which is underrated. Surprisingly, many business owners don’t seriously consider depreciation of their business asset; this will lead to big cashflow problem in the future – and we all know a business can be profitable but have th cashflow in the red.

Depreciation is probably the main benefit of leasing a car. When you buy your car, you must calculate the depreciation, in such a way that when the time comes, you have cash reserves to replace it with a new one. When you lease a car, depreciation is not taken into account; it’s the lease company’s responsibility.

3. You pay less tax when leasing a car

Buying a car, you have to pay taxes on the vehicle up-front. Although it’s deductible, as you purchase it for business use, it can’t beat the tax benefit of leasing a car.

When you lease a vehicle, you usually only pay the tax on the lease as part of the monthly payment – which is also tax deductible.

4. New fleet on regular basis

This might not be the best benefit, but if vehicle production year and brand image important to your small business overall image, leasing is the solution for you.

Essentially, leasing lets you to always have the latest vehicle model in your fleet. Not only for image, leasing a new car can also give you a residual benefit…

5. Lower repair costs

New cars mean lower repair costs, naturally. What’s more, depending on your lease agreement, the leasing company may cover the repair costs of your leased vehicle, even replace it with another car.

Car leasing company, like Leasing4Business, can include service and maintenance in the monthly rental, giving you the peace of mind in running your business.

Some leasing caveats

Of course, there are always two sides of a coin; in car leasing, there are some drawbacks which you should taken into account.

The first and foremost, leasing a car means you never really own your vehicle. Again, this depends on the agreement with your car leasing company – depending on the type of your vehicle lease, you may have an option at the end of the leasing term to purchase the car.

Furthermore, leasing a car means you always have a car payment to take care every month, and it can be expensive. As you use the vehicle, you may have your car payment to rise due to the mileage restrictions.