There are a lot of reasons why you may want to purchase a new vehicle for business use versus lease one. On the other side of the coin, though, there are a lot of benefits to simply leasing the vehicle and not having that strong of a commitment. When you purchase a car for the sake of commuting to work or going to meetings, you want to think of all the financial obligations involved. The last thing you want is to be in over your head with fiscal responsibilities. So, should you buy or lease a new vehicle for business use?
There are a number of reasons why leasing a business vehicle is a smarter financial investment than buying one. First of all, you won’t have such a large initial investment. When you lease a vehicle, you pay the down payment and then sign an agreement to pay a monthly fee – which is usually less than a couple hundred dollars depending on the vehicle you choose. When you purchase a vehicle, you must pay an even larger down payment. And if you need a loan to purchase the vehicle, you could be sending yourself even deeper into a financial hole, because not only do you have to pay off the vehicle, but you also have to pay back your loans.
Leasing may also be smarter because of the depreciation value after you make a purchase. As soon as you roll off the lot, your new vehicle may be worth hundreds of dollars less than it was worth when you purchased it. Indeed, you may be able to write off the depreciate value on your taxes, but it may be a wash when you finally go to sell the vehicle and have to pay taxes on the proceeds.
When it comes to car insurance, most people think purchasing a vehicle seems like a smarter idea. It makes sense: when you own your vehicle, there is less of a liability, so your rates are often cheaper. But if you are looking for cheap Washington D.C. car insurance quotes – or quotes in another state – you may find that leasing is actually the smarter fiscal choice. You may have to pay gap insurance, which is coverage of what you owe on the vehicle, but if you are only driving the vehicle for the sake of your occupation, you may be able to qualify for much lower your monthly premiums – the less miles you drive, the cheaper your insurance.
Lastly, you also have to consider repairs and maintenance when deciding between leasing and purchasing a vehicle. Another big reason why leasing a vehicle is a smart decision is because you can save a tremendous amount of money on maintenance. After a few years, the car that you purchase will start to show signs of wear and tear, which means that you will have to start shelling out money for repairs. In the end, there is a lot less maintenance involved when you lease a car, because the dealership has a vested interest in making sure the vehicle stays in tip-top shape, which usually works out in your favor.