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Why you should buy and not lease your next company car

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Why you should buy and not lease your next company car

Your business is starting to heat up and you need a vehicle to support those demands. If you know what you want, but don’t know how you’re going to pay for it, then you need to ask yourself the following questions: how often will you be using the vehicle, what is the purpose of the vehicle and what are you prepared to pay for that vehicle? These are the questions that will lead to you finding the best option for your business.

 

Choosing the best buy to suit your requirements

Over the years, leasing business vehicles has become a lot more attractive to business owners than buying a business car. While the short-term finance rates for leasing may make the most sense in the beginning, weighing up the long-term pros and cons of both options is essential to business success.

 

The drawbacks of leasing

Leasing a car isn't right for everyone, in fact, it’s an entirely different ballgame. To put it in simple terms,

you are renting a car from an owner and you are responsible for its condition at the end of your lease. It really depends on the type of vehicle you choose and the duration of your lease. For the short-term, payments are less than buying, but the longer the lease is the more holdups you have. For example, the number of kilometres you’re restricted to per year, how often the car will be replaced, the cost of monthly charges, required down payments and the buyout cost at the end of the lease. Your insurance costs are also a lot higher in leasing than in buying, and should something happen, repairs can be costly.

 

The benefits of both

If you are a small business owner, it might always feel easier to take advantage of your own personal vehicle for company purposes. But if your car is used for both personal and business, you may have to recognise taxable income for the personal usage. Part of your decision to buy a company car should be based on the tax considerations, along with other reasons linked to the car being yours for keeping.

If you choose to buy a vehicle, the car is yours for keeps. You are also able to customise your vehicle by accessorising and adding specific features that reflect your company brand. There are no car limitations, besides your monthly payments unless fully covered for in the beginning.

If you are someone who likes to change your vehicle every few years, then leasing may be better for personal usage but not necessarily important when looking for a business vehicle. However, if you are someone who is more prone to accidents, leasing a vehicle will not be feasible. The great thing about leasing is that you can return the vehicle at the end of the lease. This also makes it easier to get more car for less money, because you only pay for the amount of months or years that you lease the car.

If you choose to buy one of the used Audi vehicles you’ve been leasing, the option is there.

  • The bottom line on buying: If you buy a car cash, it’s yours to keep until you choose to sell it. Of course, it won't be worth as much as you paid for it, but overall, buying provides you with more flexibility and zero commitments, if you pay for it cash. If not, it’s still yours until paid off.
  • The bottom line on leasing: For a flashy vehicle, leasing is the way to go. You’re able to drive a car that you cannot afford. It will also cost you more over the long run than a car that you buy, and you’ll be subjected to more fees and restrictions.

Based on the above information, it’s clear that buying is the more practical option. Ultimately it all comes down to your preferences, your lifestyle and your budget, but more specifically what you will be using that vehicle for. Before you make any impulse decision, weigh up your requirements before taking the plunge. If you are buying a heavy-duty vehicle that’ll be used for production, the need is vital, but if it is just a company car getting you from A to B, make sure you have the long-term finances to cover the splurge.

As a result, buying is generally a more cost-effective solution which frees you from the payments and restrictions involved in leasing, leaving you to do as you wish with your car. While it may be tempting to just go out and lease a fast and fancy vehicle to show off your success, business owners should consider what works best for their company to avoid any running into any financial problems in the near future.

 

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