Financing a business vehicle: Should you lease or buy?
There are many lines of work where having a car is essential. Whether it’s travelling to meet clients or to get to a job, or simply having a car to get to and from the office – without a business vehicle, many of us would be at a loss.
That being said, there then comes the issue of investing in the car itself. While you might have a specific make and model in mind, the decision to buy this outright or lease it comes with pros and cons you will first need to weigh up.
To help you with your decision, here are a few such positives and negatives for each set of circumstances.
Buying
If you want to simply purchase the car, you should think about the following:
Pros
- You own the car and can sell it in the future
- You can change or modify the car to suit your business needs or branding
- You aren’t tied into any long-term payment plans
Cons
- You have to pay for annual costs such as insurance, MOTs, services, taxes and any repairs
- The vehicle will depreciate in value, especially if you’re doing a lot of miles in it
- Brand new vehicles are expensive and more difficult to come by for smaller businesses
Leasing
For those of you considering leasing a business vehicle, you can think about these:
Pros
- All your costs (aside from fuel) can be covered in one monthly payment
- Often you get a brand-new vehicle to use and this is replaced with a new model at the end of the contract
- A new vehicle can leave a better impression on clients and potential customers
Cons
- Ultimately, you don’t own the car and have to give it back or swap it when your contract is up
- You won’t be able to modify the car, unless you have special permissions
- Financially you are tied to a regular payment that has to be made each month
Additional Advice
While the above seems a fairly even split, there is something you could do to combat the potential financial problems in each; you can get a loan to make your purchase more affordable. There are even providers like Likely Loans for instance that can offer specialist car loans in varying amounts.
So, make sure you consider the above advice in your business vehicle decision making and you could help ensure you spend your money on the car or van that best suits your situation and industry.