Leasing or Buying: Which is better for your small business?

There has been a time when the leasing wasn’t really exists. Some export companies took the responsibility to export your goods from one place to another place. Such companies continue to exist, and leasing option has facilitated the company owner to avail the vehicle services on a much affordable price. Also, the option of commercial car on lease helps the business owner save the taxes, as the leasing charges are tax free.

We all understand the procedure of buying a vehicle. It’s the same, whether it is for commercial use or person. You’ll have to go through the same procedure. Leasing is slightly different. Thus, before comparing the two services, let’s understand about the leasing service.

Leasing: An Overview

There are vehicle leasing companies exist in India and across several other countries. These companies offer the vehicles as per your or your business’s requirements. All you have to worry about is the fixed lease payments.

Leasing is pretty popular among business of all sizes who rely on vehicle, whether that is a single van or an entire fleet. E.g. a start-up delivery business needing several vans may not have the capital to buy the vehicle overnight.

Here are a few factors that explains the difference between leasing and buying and give you the better idea to compare.

Money:

Money is the prime factor in any type of services person require. Let us have a look at the comparison:

Leasing:

• Customer has to pay fixed monthly payment decided after the mutual agreement of vehicle leasing company and the customer.
• Low upfront cost
• Commercial car on lease claims 50% of VAT if car is used for both business and pleasure, and 100% if used solely for business.

Buying:

• There is no monthly payment
• Large upfront cost
• Purchase price is fixed.

Risk:

Commercial car on lease involves risk, so the buying option. The person has to decide to choose one of the services after the complete risk analysis.

Leasing:

• Commercial car on lease takes the responsibility of the entire depreciating cost
• Maintenance can be included or excluded during the leasing payment.
• There is a norm of penalty charges, if you decide of early exist from leasing duration

Buying:

• Vehicle losses its value quickly
• Maintenance cost and requirement increases as a vehicle ages
• There is a freedom to sell your car whenever you want

Afterwards:

Under the afterwards elements, we would see the two services Buying and leasing offer better benefits during the end of their service time.

Leasing:

• At the end of the lease contract, you are required to return the commercial car on lease.
• You will have to pay penalty, if you make delay in returning the vehicle to the leasing company.

Buying:

• Selecting a buyer and negotiating the second-hand price is your responsibility.
• There is no defined miles/kilometers you could use your vehicle to travel.

Now, the above mention elements make it quite easier to a person, who is facing difficult to choose between leasing or buying. If you need the vehicle for short term, then the leasing option is the best. If you are a car loving person and love to travel different cars every 2-3 years, then opting for leasing option would be beneficial.

Several companies around the world consider commercial car on lease to meet their vehicle needs. This proves the popularity of the leasing option. It saves a huge sum of money also, that is another considering factor for the companies. There is one thing where the leasing option fails, you can’t feel possessing a vehicle. If you want to have that then choose your desire car and own it.