Leasing a car for your business is a sensible decision. If yours is a small business or a start-up, leasing a car would prove handy because of lower cost, easy availability and other benefits. This article discusses briefly the benefits of leasing a car for your business.
In case you purchase a car – new or used, you need to pay cash upfront in full or part. On the other hand, in leasing you need to pay only for part of the residual value. This leads to lower monthly payment.
Further, the overall cost of leasing a car is lower than when it is purchased because the lease period is a short one (generally three years). The lease cost is the present value of the car minus its value when you return it. You need to pay the interest charged and charges for the services. If the value of the car when you return is more than expected, you need to pay less.
It is a better value for your money as you can afford the car at a lower price under a flexible payment plan.
Taxes to be paid come down because you need to pay only for the value of the car that you use. Further, the amount of interest is spread into multiple months, which results in a lower monthly amount payable.
In addition, as you will have the benefit of a tax deduction for leasing a car, it helps in saving a few hundred dollars.
You get the leased car with full warranty from the manufacturer. This ensures effective remedial maintenance when needed. In addition, as you lease the car for a short period, you are likely to have fewer maintenance inconveniences.
Guaranteed Asset Protection (GAP) insurance
When leasing a car, you get the benefit of GAP insurance. GAP insurance is part of the lease deal. GAP insurance covers the remaining part of the value of the car to be paid by you in the event it is stolen or damaged completely in a vehicle collision. This value is far smaller than that of new/used vehicles purchased. For a small business like yours, it is important to take note of this.
You lease the car for your business, and use it as long as you would like. At the close of the lease period, you need to hand over the car to the dealer. Now you have the option to buy the car – a new one, or take another one on lease. You need not worry about the resale of the car.