Leasing or Buying: Which is Best for Your Business Vehicle?

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If you need a vehicle for your business, you’ve probably been trying to decide whether it would be best to lease or buy it.  Buying a car is the most expensive upfront option. However, after you have paid for it, it is yours to keep.  Leasing, however, can be the better short-term option as it is cheaper, and you won’t be responsible for performing any maintenance.  For more pros and cons, keep reading.

Do You Have the Money for a Down Payment?

One of the first things you’ll need to ask yourself is whether you have the money for a down payment.  If you don’t, you’ll have to lease a car anyway.  Almost all car loans will require you to put down a percentage of the sale price before you can drive away.  You’ll also need to sign a contract with the loan company stipulating how much you’ll pay each month.  With leasing, you just need to pay a monthly fee for as long as you use the car.

Who Will Be Driving the Vehicle?

When you lease a car, you are usually provided with a mileage stipend, and any extra mileage you do on the car will be charged as extra.  If you are driving the car yourself, you will be able to monitor your driving and ensure you don’t go over this limit.  However, if you are leasing a car for an employee, you may not be able to monitor this so closely.  In this case, you may be better off buying.

Can You Afford to Pay for Maintenance?

When you buy a car, you will be responsible for its maintenance.  This includes replacing any liquids and fluids like oil, replacing the tires, and paying to have it fixed should it break down.  When you lease a car, the hire company is usually responsible for all of this, and they may also provide you with a replacement vehicle while work is being done on the car.  Unless you know for sure that you will be able to have your car fixed quickly, or you are willing to buy a backup vehicle in case of emergency, leasing may be the better option.

Do You Want to Claim It as a Business Expense?

Finally, you also need to consider whether you want to claim your vehicle as a business expense.  When you lease a car, you can claim the full monthly fee as a business expense. However, when you buy a car you are only able to claim the interest as an expense.  Both payment plans may be eligible for depreciation, but it is wise to speak with your tax advisor or accountant to determine whether this is the case.

Whether it is best to buy or lease a car will depend on a lot of things, including those described above.  Just remember to compare your autolotes en Honduras before taking out a plan and make sure all drivers are fully insured and legal to drive.

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