There are many difficult decisions you need to make as a business owner when considering long-term cost. This has been the case with company vehicles for years now, with the decision between leasing and purchasing being one that is hotly debated. While there is no one answer as to which is the right fit for everyone, there are certain aspects that you can look at to narrow this down and ensure you have traveled the right path for your individual business.
Exploring the avenues of cost means breaking down the advantages and usage of each, which can be accomplished beforehand as you probably already have a purpose for these vehicles in mind.
Leasing a Vehicle
Leasing a vehicle is generally a much better deal for the short term. Perhaps the biggest advantage of this is that leased vehicles tend to be at least partially tax deductible as a business operating expense. While this can be the case for some purchased vehicles, leases tend to be less stringent with their criteria.
The next main advantage is that a leased vehicle, by its impermanent nature, can be upgraded to a newer model once the lease period is finished. This is especially useful if you want to work with top-of-the-line vehicles or wish to project a specific image.
Another important point is that the ongoing costs of leased vehicles are predictable and can thus prove a much easier item to enter into the monthly or yearly budget.
Finally, there is the fact that depreciation is a major concern for purchased vehicles. If you cannot recuperate the costs on a vehicle then this might itself prove a deciding factor.
Purchasing a Vehicle
If you intend to keep a vehicle for the long term, especially if you wish to modify or paint it in some way, then purchasing could very well be the preferable option. This is especially the case if the vehicle is intended to travel a significant quantity of miles, as leased vehicles tend to have strict limits on distance.
Also, if you own a vehicle it can be much easier to fit it within your greater business insurance. Online business insurance quotes often consider these as a fundamental element of the equation, after all, and by combining different elements of insurance under one roof you can better gather overall savings.
Another advantage here is that at the end of the loan period, provided it is not purchased outright, you’ll have a fully owned vehicle, which tends to cost a lot less than the monthly lease fees. Some varieties of work vehicle also suffer far less depreciation than others, which is another component to keep in mind.
No One Right Answer
By looking at the above points, you should at least have gathered some indication of which route is right for your business. Be sure to fully investigate before dedicating yourself to any option and consider what possible though unlikely costs might arise from each option in the future.
Plan ahead and look at what similar businesses in your industry have done, and the decision that’s right for you should be that much easier.