When you operate a business, and you need to get a new vehicle for it, you have two options available to you that you can consider that can help your business get the vehicle it needs. You can consider purchasing the commercial vehicle outright or getting a loan to buy it, and the other option is leasing, which many companies tend to do. Each option has pros and cons, so you need to consider them carefully before deciding what is best for your business. Below are some of the pros and cons you need to consider that can help you decide whether to purchase or lease the vehicles you need for your business.
The Pros Of Leasing
When you decide on a Transit Custom lease instead of buying, there are many advantages your business can enjoy, including potential tax reductions. You may enjoy lower monthly payments for the vehicle compared to if you got a loan to pay for it, and you also get the benefit of getting a new vehicle every few years, depending on your agreement. The lease covers the repairs and servicing, so you do not need to worry about that, and you also do not need to sell it when you are updating your fleet of company vehicles.
The Cons Of Leasing
There are also cons to leasing a vehicle, and one is that you do not get to own the vehicle, so you have no tangible asset for the money the business spends. You cannot sell or trade in the vehicle, and you are stuck with it till the end of the lease if you do not like it and want to change. There are also additional fees you may have to pay, including:
- Excess Mileage Fees
- Modification Fees (If you modify the vehicle in any way, such as signs on the vehicle)
- Excess Wear & Tear Fees
- Acquisition Fees
- Insurance Repair Fees (only when not covered by your contract)
Leasing can get expensive if you are not careful, so you need to look at the terms and conditions of a leasing agreement in detail, so you understand the fees the leasing company charges.
The Pros Of Buying
There are also pros to buying a vehicle outright for your business, and you can also claim tax back on the vehicle when it is used for business and not personal use. There is no need to worry about the annual mileage and any charges you must pay if you exceed it. You are in control and can sell the vehicle or trade it in whenever you want, and in the long term, it is cheaper to run a vehicle when you own it. Whether you pay cash or take out a loan, owning your vehicles outright is something many businesses prefer.
The Cons Of Buying
There are also cons to buying a vehicle for your business which can soon add up and prove expensive if you are not careful. The cost of servicing and maintaining the vehicle can get costly, and you will also need to MOT the vehicle, depending on its age. However, the worst part of owning a company vehicle is the depreciation and watching the value of your business asset drop before your very eyes.