What Are The Pros And Cons Of Leasing A Company Car?
When you run a business and you need a vehicle, you might consider organizing a company car. Or perhaps you want to provide a company vehicle for your employees. Before you can start arranging for a car to be delivered, you’ll need to make one crucial decision first; should you buy the car or lease it? There are pros and cons to each idea, and in this article, we’ll be concentrating on the advantages and disadvantages of leasing a vehicle, since this is the most common way that company cars are arranged. Read on to find out more.
The Advantages Of Leasing A Company Car
The first main advantage of leasing a company car rather than buying one is the tax implications. When you have monthly lease payments in place, these can be used as tax-deductible costs and can be included in your annual tax returns for the business. You should list them as a business expense.
Another reason why leasing might be the best choice for you is that, depending on the type of lease you decide to choose, the contract will cover all the maintenance and repair costs. When you’re running a business, any savings will be helpful, and the cost of the annual maintenance and checks of a car, even if no work needs to be done, can be expensive. Add to this the fact that you might be paying for specialist SR22 insurance cover for your employees if this is necessary and paying their fuel costs too, and saving on the maintenance could be a big draw, off-setting the other costs nicely.
This leads us to another advantage of leasing your company cars; it’s less expensive than buying one – most of the time. Of course, it will depend on the car you choose and the length of the lease, as well as the extras you decide to pay for, but in general terms, leasing is cheaper than buying, and your monthly costs will be lower.
At the end of the lease, you can return the car with no hassle. Simply arrange a date and time, and you will either need to drop the vehicle at a specified location, or it will be collected from you. In other words, unlike when you own a car and you need to get a new one, you won’t have to worry about selling it, speaking to potential buyers, spending time advertising and showing the car to those who might want it. You simply hand it back at the end of the lease, and that’s it.
The Disadvantages Of Leasing A Company Car
As with anything in life, if there are good parts, there will be bad parts too; if there are pros, there will be cons, and leasing a car for your company vehicle does have disadvantages too. The first is that there will usually be a mileage limit on the vehicle. This limit is put in place to protect the car’s value since the leasing company will sell the vehicle once it is returned to them, and they want to make as much money back as they can. If you go over this limit, you will be charged a certain amount per mile which can cost many hundreds, if not thousands, of dollars at the end of the lease.
A leased car will also come with various restrictions regarding what you can and can’t do. You might be restricted as to where you can go, what you can carry (or even how many people), and you won’t usually be able to customize the car. This means that if you want to use the vehicle for your business and want to have it sign-written, this might not be possible.
Finally, make sure you check the small print. There could be early termination charges if you need to end the lease before it is up, and there could be additional charges for anything over and above the normal amount of wear and tear expected.