If you’re considering getting a new company car, you might be asking yourself whether it’s best to buy or lease.
This decision depends on your circumstances, but there are some questions you should ask yourself to land on the best option for your business.
How Many Miles Will You Put on the Vehicle?
One of the most important things to consider when deciding between leasing and buying is how far you plan on driving it and how many miles you will rack up on the odometer. Typically, leases have a yearly allowance of 12,000 miles. Not all leases are the same; some allow more miles, some allow fewer.If you surpass the annual mile allowance, you will need to pay a fee that is generally set at a flat rate per mile. This is an essential thing to consider since these fees can become expensive very quickly.
How Much Do You Have for a Down Payment?
Another thing to consider when making this decision is how much money you have to make a down payment. When you lease a car, you will generally need less money available to you when you sign the contract than you would if you were buying. Some leases don’t even require a down payment at all. For example, at Pink Car Leasing, you can secure a lease for a company car with no deposit. So, if you do not have a significant amount of funds available for a down payment on a company car, leasing might be your best option. Generally, the best option is to put down as little money as possible when leasing. On the other hand, if you plan on buying one using finance, it is typically best to put down as much money as you can afford before beginning repayments.
How Will the Car Be Used?
If you are using a leased vehicle in your business, the company providing the car will often place restrictions on how you can use it. They might implement restrictions on where you can drive or how regularly you can do so. While this might not be a huge concern if you have a specific area that you operate, you should be aware of this nonetheless. If you plan on using the car as a pivotal tool for work, like using it for Uber, you will need to verify with the leasing company whether this is allowed. Most of the time, these uses will be expressly forbidden under leasing agreements, so it is worth checking before signing any contract. Additionally, you should also be aware that if the car sustains significant wear and tear during the lease agreement, you will have to pay for repairs when you return it.
The Takeaway
Overall, the decision to lease or purchase a company car will be informed primarily by your specific circumstances. As such, you should consider the questions listed above to determine which option is correct for your company. Depending on your use case, either purchasing or leasing could be best for your business.
