subject: Leasing A Company Vehicle Is Preferable To Purchasing [print this page] When you are looking for a new car for business use, you have some choices to consider - lease or buy? Both have pros and cons but you need to consider what is going to be most advantageous to your business. Leasing a company car means that your business does not own the vehicle and therefore cannot claim it as an asset but neither does your business have any of the responsibility of the upkeep or maintenance. Purchasing a company car will give your business a valuable asset however, the business will be responsible for that vehicle and this could prove costly. You will need to find out how any tax benefits can be advantageous to your business and this is something that you will need to review every year particularly if the tax laws change. It may also be worth looking at different methods of financing the lease or purchase as there may be other advantages to be gained.
It may well be that there are further benefits to leasing a company vehicle that are available only to businesses and not to individuals doing the same thing. This will be mostly to do with mileage and you need to be sure that you have a sufficient number to allow you to conduct your business without going over as there are normally stiff penalties for exceeding the mileage allowance. Ensure you carefully read and comprehend the small print in the agreement document before you sign up, because it would be unfortunate to find yourself stuck with a lengthy contract that does not suit your company's needs. Purchasing a vehicle on the other hand does not have such limitations but you will have to pay for servicing, road tax, tyres and so on which is normally included in a leasing agreement and this is quite an expensive undertaking. Another point to consider when purchasing is that as soon as you drive off the forecourt, your new car immediately loses value and will continue to lose value for as long as you have it. However, leasing means that your company does not carry that loss. At some point your lease agreement will come to an end and you will have to either cancel it or renew it. Do not renew it automatically as there may be some better deals or more suitable options for you to choose from. Another good point of leasing is that after so many years, you will need to replace or renew your company car anyway and with leasing all you do is hand it back and choose a new one. If you have purchased, you will have to sell or trade it in and then find a new one. This is the rationale that most businesses use when choosing to lease cars rather than buy them.
So, when the time comes to replace your company vehicle, do consider leasing as a very favourable option. Check out any tax breaks that might be available, look for good deals with inclusive benefits and a flexible mileage allowance, and, think about not having to worry about maintenance, depreciation and replacement.
