Business Car Finance: Buy or Lease?
Cars can be an essential asset to businesses of all shapes and sizes. Vehicles don’t just help you get from A to B – they’re useful for transporting goods, assisting clients and allowing you to make cross-country trips from meeting to meeting, or job to job.
As with private vehicles, financing is immensely popular. All things considered, however, which option is more beneficial to you long-term – to buy or lease a business vehicle?
Buying a Car for Business
Buying a car outright can be appealing. There’s nothing quite like owning your own vehicle! However, running a vehicle for your business can really run up costs, too.
- You’ll own your car outright. There’s no mileage or usage restrictions in place.
- Once you’ve bought your car, you merely have to pay running costs.
- However, the costs of owning a car can stack up when you take into account how much you’ll need to pay over its lifetime.
- Prestige vehicles and top lines are often harder to buy outright. You’ll need to have significant money available!
- Another drawback of owning a car for your business outright is that you’ll have less opportunity to swap to a newer model. If you wish to change your car, you will need to sell and buy all over again.
Many businesses may have the capital available to buy a car outright for commercial purposes. However, we believe this advice isn’t so much recommended for small firms – especially those who may have a more stringent financial plan.
Leasing or Financing a Car for Business
Leasing or Financing a car for business mean you have complete ownership or free title of the vehicle, but what it will mean is that you have flexibility and freedom in plenty of other ways.
- Leasing or borrowing essentially means that you are paying for a car’s depreciation month by month. In simple terms, that means money saved for you in comparison with running costs on a machine you possess outright.
- Leasing or borrowing can begin with a simple down payment and a flexible lease or set loan payment plan.
- You’ll have access to a vast range of cars and choice in models – which may otherwise be expensive to purchase outright.
- In most cases you will be able to claim back tax on the monthly loan payments or lease installments.
Conclusively, vehicle needs will vary from business to business. When it comes to saving money month on month, having a greater selection of vehicles to hand, and funding the purchase with tax effective credit, car loans andleasing is perhaps the most common solution for business.
For more advice on financing and leasing cars for business, Auto Car Loans can help! Call 1300 301 051 today to learn more.