Company Vehicles, Lease or Purchase

When you are choosing a new company car, there are some other options for you to consider, lease or buy? Both options have good and bad points but it is very important that you take into account what is going to be the best option for your business. Your business won’t own the vehicle and therefore will be unable to use it as an asset if you take the leasing option. However, the business does not have any of the responsibility for the maintenance of the car. Purchasing a vehicle for the business will give it a valuable asset however, the company will be responsible for that vehicle and which could be the more expensive option with maintenance, tax and consumables. You will need to find out what tax breaks or benefits the business can claim, you may find that this can prove very advantageous to your business and is one of those things that you will need to review every year when the government announces their budget for the next year. It is also a good idea to investigate which methods of financing the lease or purchase are on offer in case there are further gains to be made.

You might find that there are a number of benefits to leasing a vehicle that apply to commercial business that are not available to a private individual doing the same thing. This will be mostly to do with mileage and you need to be sure that you have a sufficient number to allow you to conduct your business without going over as there are normally stiff penalties for exceeding the mileage allowance. Make sure you read and understand all small print in the agreement document before signing anything, as you don’t want to be locked in to an agreement that does not suit your needs. Buying the company car on the other hand does not have such restrictions, however the company will have be responsible for servicing, road tax, tyres, etc. and these are things which are generally included as part of a lease agreement and which can be expensive. Another point to consider when purchasing is that as soon as you drive off the forecourt, your new car immediately loses value and will continue to lose value for as long as you have it. However, leasing means that your company does not carry that loss. At some point your lease agreement will come to an end and you will have to either cancel it or renew it. Do not renew it automatically as there may be some better deals or more suitable options for you to choose from. Another pro for leasing is that after a few years, you will need to replace or renew your company car anyway and when you lease, it is so much easier to give it back and select a new one. If you have purchased, you will have to sell or trade it in and then find a new one. This is the rationale that most businesses use when choosing to lease cars rather than buy them.

When you are looking to replace your company vehicle, leasing is a very viable option which is worth looking into. Find out about any tax benefits that are available, look for offers where there are inclusive benefits and the opportunity to adjust your mileage allowance, and, think about not having to worry about maintenance, depreciation and replacement.