There are lots of businesses that require a car for daily use – but is it better to buy or lease the vehicle?
What you do depends on a few factors: how much mileage the car will go through, your budget, and how long you plan to keep the car for. So if you want to work out which option is best for you, you must ask yourself a few questions first.
Here are five questions you should ask yourself before you buy or lease a car for your business.
Who Will Drive The Car?
The first thing you should ask yourself is who will be driving the car. If you are the driver, you are in complete control of the mileage, but if an employee is driving the vehicle, they may occasionally use it for personal trips. This can be avoided if they return the car at the end of their shift, but there is still a chance that they will make a short trip in the car during their break. This can affect how much you pay if the car is leased, so if someone else will be using the car, you may want to consider buying it so that you don’t have to pay more if they go over the mileage.
Wondered about how safe your driver will be within your vehicle? If so, you could consider investing in commercial vehicle camera systems and GPS so you can improve driver safety with real-time visibility.
What Tax Option Is Best For You?
You should also consider your tax options. If you lease a car, the payments are tax-deductible (although this is based on how much the car is used by the business). However, if you buy the car outright, the only tax-deductible aspect is the interest on the loan. So leasing a car may come with more tax benefits, which is ideal for a small business with a tight budget.
What Will The Mileage Be?
Think about how often the car will be used: will it be driven all day, every day, or will it just be used a few times a week? Car leases normally have a limit on mileage, so if the car isn’t used often, leasing could be the best option.
Are You Going To Pay For Maintenance?
Whether you buy or lease, car maintenance is important, as it helps retain the value of the vehicle, but if you lease the car, you may find that you are legally required to maintain the car. This can be a lot of effort for some people, but if you are willing to pay for tire rotations and oil changes, leasing could be a good idea.
What Do You Want To Do With The Car In The Future?
Finally, you should think about what you want to do with the car in the future. If you buy the vehicle, you can keep it for yourself or sell it on, but if you lease the car, you will have to give it back to the dealer. This isn’t a problem if you don’t have long-term plans for the car, but if you do want to use the vehicle for five years or more, you may want to buy it outright.