There are many good reasons why you would want to lease a company vehicle, including the chance to visit your customers and create the right profile of your business.
Whatever plausible reasons you have for getting your business mobile it is likely that when you start your search for a suitable vehicle you will be offered the chance to sign a leasing deal rather than commit a large chunk of cash by buying outright.
Here is a look at why vehicle leasing is so popular these days plus details of the various options and terms that you are likely to encounter, plus tips on how to find the right leasing deal for you and your business.
Making the smart choice
If you are looking at new cars for sale at Don Wessel Honda, for example, you should soon be able to find a vehicle that you like, but it is not just picking the right make and model that matters as you also need to work out whether you would be better to lease or buy.
The majority of business owners do tend to end up leasing rather than buying a car and auto leasing is gaining popularity as the smart option with consumers in general, for a number of valid reasons.
Paying less cash as a down payment, the ability to change cars more frequently and potential tax benefits for business owners are just some of the factors that can sway things in favor of leasing over buying outright.
It should be noted that there is rarely a clear black and white formula to say that you should choose one option over the other, as every business situation is different and you have to weigh up the pros and cons of both leasing and buying to see which one ticks more boxes.
One of the key facts to consider is how long you think you will be wanting to keep the car for.
The reason why intended length of ownership matters is that many business users are likely to put a lot of miles on the car and if that is likely to be the case you are probably going to be better served by leasing.
Taking a lease means you can switch cars easily and take out short-term deals without worrying about piling on the mileage. If you buy a car and have it for at least three years the mileage count will not only have a detrimental impact on residual values, you could also end up paying more in maintenance and repair costs due to wear and tear.
Swapping cars frequently is a positive factor with leasing deals but you should remember that the leasing charges tend to reflect higher mileage costs, which can increase the monthly payment if you are going to cover a lot of miles with the car.
It makes sense to do a cost comparison between buying and leasing so that you can see which one wins over the length of time you intend to keep the car for.
Start by looking at the monthly cost of leasing compared to loan payments, making allowances and calculations for mileage as well as maintenance costs and other expected payments over the period.
Also, work out how much you will have to take out of cash flow at the beginning and end of the term. Calculate the amount of money you will have to pay as a deposit if your lease or buy, and make a calculation as to the value of the car at the end of the lease compared to the ownership period along with any tax advantages that may be available for your business.
If you are a business owner and you want to acquire a car you always need to pay attention to the various tax options in order to see what works for you.
When it comes to income taxes it should be remembered that leased vehicles are not depreciated but your driving costs might be deductible. It is always a good idea to get a professional opinion from an accountant so that you understand what the IRS deems to be an inclusion amount and other qualifying criteria that could all help to sway your decision.
Leasing seems to win the day more often than not if you are looking for a business vehicle, but it makes sense to check all your options before finally committing to a deal and getting mobile.
Don Wessel Honda President, Jon Wessel, is a second-generation dealer and has worked in the store since age 14. Jon is a true “car guy” and has a passion for anything car-related.