There has always been an unwritten rule regarding new cars, which is that if you are a private individual, you buy, or at least take out a finance deal, and if you are a company, you lease. So it has always been and so it shall continue to be.
Or shall it? These days, there are more lease companies popping up all the time, and if you take a look on their websites, you will see that they are as happy to deal with individuals as they are with big companies. So could the argument run both ways? Might businesses be better off buying instead of leasing, while private individuals are leasing instead of buying, in today’s topsy-turvy world?
The short answer to that question is “No.” The long answer is “Almost certainly not, except in very unusual circumstances.” Let’s take a look at why.
1) You can get a better car for less money with a lease deal
In all honesty, this first reason should be enough for us to get online, look up a website like vantage-leasing.com, order the car of our dreams from their list of specials and drive off into the sunset happy. Seriously, though, when you can get a BMW 1-series for £200 or less every month or a gorgeous £50,000 Range Rover for a monthly lease of a little over £400, why on earth would you consider anything else?
2) You can reclaim the VAT
Lease costs can be claimed as a business expense, whereas with a purchase it gets a lot more complicated. The long and short of it is the lease deal is more tax efficient.
3) You can leave your cash in the bank
A car is not cheap, and even if you take out a loan with reasonable interest terms, you will still be expected to lay down a fairly hefty deposit. A business marches on its cashflow, so anything you can do to avoid that kind of hit has got to be worth doing.
4) You can budget more effectively
Take out a lease deal that includes all the servicing costs and consumables, and you know exactly what it is going to cost you every month for the duration of the deal. No nasty surprises when it eats yet another set of tyres or the 20,000 mile service creeps up on you.
5) No hassle with trade ins
Owning a car is a responsibility and a hassle. When you go to change it, you need sell it on, and that can sometimes be more trouble than trying to rehome an ailing Labrador. With the lease deal, all you have to do is take it back and sign on the dotted line for a nice new one.
Does buying ever make sense?
The cost of your lease is dictated by the resale value, so if you are going to return the vehicle with astronomical miles on the clock and dents and scratches all over it, be aware that it will cost you more. If your vehicles are used that hard, it is sometimes worth simply buying something and driving it into the ground.