Buying versus leasing a car for business is a decision that isn’t necessarily simple, and the considerations aren’t the same for everyone. Here are a few things you might want to think about when weighing your options.
Cars only depreciate in value
If you buy a car then you have more of your cash tied up in it – and cars depreciate very quickly, especially in the first two to three years. Buying means that you are accepting the cost of that depreciation, and will lose money when you sell it. If you lease a car then the vehicle funder takes on that risk. Also, leasing a car means that you don’t have to worry about the hassle of selling it at all – you can simply hand the keys back and lease another brand new vehicle.
Maintenance costs are covered
Many leases also cover maintenance costs as part of the deal, meaning that you won’t have to pay for oil changes or new tires. A leased car is also under warranty, so if something should go wrong you are not left out of pocket with no vehicle. Do remember to get GAP insurance if the dealer doesn’t offer it, however.
Take advantage of the latest technology
Leasing a car means you are always using up to date tech. This doesn’t just mean the latest in connectivity and entertainment, but also includes the best new safety innovations as well. Have a look at our article on supercar hire if you’re looking for the absolute cutting edge, and want to make a real impression.
Smaller capital outlay
If you lease, you will be paying much less at the start of the lease and with each monthly payment. Be careful when you sign a lease as some dealers will add unnecessary fees – most of these can be negotiated down. Think about the length of the lease you want; if costs are a concern consider a longer term lease, which will mean lower monthly payments than for a shorter lease. Consider a broker such as Intelligent Car Leasing, as they can help you find a good deal.
As well as the cost of the lease itself, a lot of the other expenses of leasing are tax deductible: gas, oil, insurance, registration and parking fees, and even loan interest. All of these can save you money. Take a look at this article for a more comprehensive list of tax-deductible items associated with business driving you can put on your tax form.
Be aware that there are some items you cannot deduct as business expenses, however. For example, you cannot deduct personal use. It might seem surprising, but you cannot deduct your commute to and from work as this is considered a personal rather than a business use – even if you are transporting business materials at the same time. There are some great online guides that explain more about mileage and tax deduction.