When making any purchase for your business, it’s all about what makes the most financial sense. After all, expense tracking and sticking to your budget are major elements of running a successful company. When it comes to buying a car, it is cheapest to buy a used car. However, what if that is not what you want for your business? You are thinking about buying that new car, but you can’t afford to pay chunks of money to the bank for your loan. This is where leasing comes in, but is it a smart move for your business? Let’s check the advantages and disadvantages of this option.
Numerous Cars Available
There are tons of companies and vehicles available that will be within your budget. Whether you are looking for a luxury car or an SUV, you are covered. Make a list with the best leasing companies and interview them to determine which company to go with. It may take you some time, but it will save you a lot of sleepless nights that come with dealing with the wrong company. You can start your search on this page and work your way through to choose the best vehicle for your business. The best company will give you value for your money, and be transparent when you ask them questions.
When leasing a car, the rental company will require you to make a deposit or down payment. The rest of the amount is to be paid monthly throughout the lease. A typical contract usually lasts three years. This is because a cars value highly depreciates within the first three years, which makes the lease payments lower than monthly installments when buying. Ideally, you will only be paying the value of the vehicle within that period.
Be sure to maintain the car throughout the lease. This might benefit you in the end as most dealers always offer the option to buy the car. Also, when it comes to maintenance, choose a vehicle that has regularly scheduled maintenance by the manufacturer. It will be at zero cost to you. Always note the items covered by the company. You could learn how to make money leasing your car and succeed with the right tactics.
Annual Mileage Limitation
You might find yourself paying a pretty penny at the end of the lease for additional miles. As a business owner, sometimes you have to move around a lot which can be out of your control, especially when trying to build a business.
Difficulties Getting Out
Most leasing companies will either convince you to trade up or buy the car. You will also pay the penalty should you want out of the lease at an earlier stage. When business owners rush into a car lease, they often feel stuck. They do not want to end up paying more than they need to to get out of it, but they also do not want to be restricted by the various limitations. If you do not want to deal with such stresses, leasing a business car is not for you.
High Insurance Cost
In addition to the above disadvantages, leasing a car also results in higher insurance costs. Because business owners do not own the cars that they lease, they need to get the insurance that their leasing companies require. Unfortunately, most leasing companies force business owners to apply for a higher level of insurance than the business owners would get themselves. With this being said, leasing a car is not the smartest move for you and your business if you want to keep your insurance payments low. If you want cheaper car insurance, look into other car options.
Keep in mind that a car is not an investment. If you are looking to save yourself some money, it is best to pay cash for a vehicle because you can channel those monthly payments into growing your business. If you cannot afford to buy a car, the next best thing is to lease one because you might afford it within three years.