Business Lease Talk: Is A Business Car Lease Right For You?

is car lease right financial option vs buying new vehicle

A lot of businesses have chosen to lease company cars instead of purchasing, as it is more appealing because of its flexibility and benefits. The car leasing dealerships have come up with great deals for businesses, thanks to the growing industry and healthy competition between the dealerships. 

What decides if leasing is right for your business is simply what you are looking for. If the business would like to have an asset, purchasing a car would be the better option. If the business is looking to save money and taxes, leasing is the better option. 

There are a lot of other benefits of leasing cars. Let us walk you through some of them. If these seem appealing, leasing vehicles for business will be the best choice for you. 

1. You Only Pay For The Depreciation Of The Car 

Cars are depreciating assets, and most agree that it is not a great idea to invest in a depreciating asset. 

When leasing, you are only paying for the depreciation of the car during the lease term. The monthly payments are lower compared to the amount you have to pay when purchasing a car. When the contract ends, you simply go to the dealership and give them the car, and start leasing a new car with all the latest features. 

One thing to be noted is that you will not own the car at the end of the lease term, and hence you will have to keep leasing cars. 

2. You Can Keep Your Employees Happy 

Happy employees are 12 percent more productive than average, a study from the University of Warwick reports. You can buy them a car, which will make them happy till it gets old, or you can choose to lease a car for them, which will end in two or three years, after which they will be in a new car again. 

Since most of the lease terms end in two or three years, your employees will be driving the cars with the latest technology and safety features, in its most trouble-free period. 

3. Tax Benefits 

The most appealing benefit of a car lease is that you can claim up to 100 percent of the VAT back if you use the car for business purposes only. Business car leasing is subject to VAT, but you can claim back at least 50 percent if the car was used for business purposes at least 50 percent of the time. 

Even if you don't lease for business, most states tax you only for the lease and not for the purchase price of the vehicle, which, of course, will make a good change in the tax you pay. 

4. Improves Cash Flow 

When buying a car, you are getting into something that needs a lot of capital, which you could have invested in your business itself. The advantage of leasing is that you do not have to pay a large sum upfront, you can even get a one-month initial rental lease deal if you have a good credit score. 

5. You'll Always Be Driving A Warranty-Covered Car 

Unless you choose to lease a used car, your car will be covered under warranty and all the incentives offered by the manufacturer will apply to you also - if you take out a warranty package. 

Most warranties last for three years, which means that you won't have to worry about most of the repairs during your lease term. 

If you plan to lease a used car, check if the warranty has expired. Most leasing dealerships offer a maintenance package, don't hesitate to take one as it will be a money saver. 

Summary 

Leasing cars instead of purchasing offers a lot of benefits for businesses, such as tax savings, improved money flow, and low repair charges. Businesses can avail up to 100% of the tax back depending on the usage for business purposes. 

However, when deciding whether car leasing is the right choice, you should take its other side also into account. The business will have to keep leasing cars, and will not own them. But considering the lower payments, tax savings, and other advantages, car leasing is something that every business will think of for their company vehicles.

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