Should business owners prefer leasing over owning company vehicles? It a question whose answer is best found by cost savings that leasing brings. If the company decides to buy a car, it means the finances should be enough to pay for instalments on regular basis for the stipulated period. The loan has to be repaid even if the value of the car drops below the amount on the loan. For instance, there is an untoward incident and the car crashes. While the car is damaged but there will not be any effect on the monthly instalments and they need to be paid as usual. Car leasing differs in the sense that the residual value towards the end of the lease can lower the overall costs to you. Here are some reasons for leasing.
Save on Taxes
Every business owner knows how important the tax deductions are to reduce the costs. Before making any decision, it is better to have a word with the tax-preparer. In most cases, the leasing amount is deductible. However, you need to prove that the lease-vehicles are mostly used for the company or work-related purposes. So, with leasing option, the car leasing payments can be deducted, but with if you decide to buy the vehicles, only the interest on the car loan can be deducted.
Easy to Stay Afloat and Remain Competitive
With car leases, you can remain competitive for longer duration. When the car becomes old, you can make a switch to a new model. Not just it improves the business image, it is easy to often upgrade to new vehicles as and when the need arises for a new and more capable vehicle. But once a car is purchased using car loan, it is not easy to upgrade as there is locking until the life of the car. So, if a competitor goes for leasing, he can benefit from new vehicle every few years that would give it business a new young look. The costs of running a new vehicle is also low as compared to the ageing one.
Low Monthly Payouts
Those businesses who have just started their operation will prefer to save their funds for key business operations instead of using them to purchase a flee to vehicles unless it’s mandatory. When you have trouble raising capital in the first place, the payments on the lease will usually cost less than what can be paid for the loan. It means there will be more savings which can be used in the other ways. Buying vs. leasing is a more of a capital expenditure decision and that has to be taken after considering overall health of the business.
Easy to Get Leasing Approval
Getting a loan from the bank is difficult and it is all the more challenging in times of pandemic. There will be lot of paperwork, and even after completing all the formalities, it is not sure whether the loan will be granted or not. It usually takes seven days or more to get the loan approved and, in some cases, it may take even more. However, the idea of leasing is to free the business owners from these issues. It is easy to get the leasing approved within 24-hours depending on the leasing company.
Preferable When Price Goes Up
The higher the pricing of the car, the more attractive leasing option is for the business. It will give you more cash or funds each month, and leasing is preferable because of it.
Getting a commercial car on lease makes more sense for growing business. It reduces costs and leaves more money in the hand of business owner that can be used on core business operations.