6 Reasons to Lease a Business Vehicle
Image via Flickr by El Caganer
As a self-employed tradesperson or a small business owner, especially with a new business, you need to make the most of your resources to maximize profit. There are many unavoidable expenses when starting and running a business but, when it comes to your business vehicle, there is an alternative to buying. Leasing a vehicle has many benefits over purchasing one. Here are six good reasons to lease instead of buy.
- Initial Outlay
Buying a car involves a large initial outlay, or taking out a loan, which is an expense you can do without when cash flow is so important. You may also be restricted to buying a cheaper vehicle than you would like.
When you lease your business vehicle, you agree to the monthly payments and, because you are not making a big initial payment, more resources can go towards benefiting your business. Also, leasing does not appear as a debt, but as a business expense, which frees up your company’s credit line. You might find that leasing enables you to get a more prestigious car than you could afford to buy.
- Monthly Costs
A vehicle leasing contract can include a maximum mileage allowance which can mean lower monthly payments. So, while you have to work out your business mileage needs, your monthly motoring costs are easier to control. The monthly payments for a lease car are based on a percentage of its value and the length of the contract but will be cheaper than buying a new car.
- Tax Benefits
When you, as a business, buy a new vehicle, you pay sales tax on the entire value of the car, but leasing means that you only pay tax on the part of the value that you use during the lease period. Also, the tax is spread along the whole term of the lease and paid monthly, which again helps with your fixed monthly costs.
- Maintenance Fees
Any defects with a new car should be covered under the manufacturer’s warranty, but sometimes things go wrong which are not covered. You can get a lease agreement which offers full vehicle maintenance. This means that scheduled servicing and unexpected problems are covered, and not coming out of your budget.
- Prestige
When you meet customers on a regular basis, you want to make a good impression. When you drive a new model, high-spec vehicle, it tells the customer that you are successful and good at what you do. Leasing your company vehicle gives you the opportunity to change it every two or three years for the latest model. If you were buying, that might be too big an outlay for your company.
- Depreciation
Sure, buying a business vehicle means that you own an asset, but it is a depreciating asset. With every mile you drive and every ding in the fender, it is losing value. With leasing, you return the car at the end of the lease term and the leasing company takes the hit on the depreciation, while you start over in your next new car.
Take advantage of these benefits by leasing a business vehicle, and get the most out of your limited resources.