Drive Your Business Forward: The Benefits Of Leasing A Car

Drive Your Business Forward: The Benefits Of Leasing A Car

Looking for a new car to help grow your business but low on cash? Getting a car on a lease can help. 

While new business owners are always looking for things like marketing strategies to boost sales, they forget to keep the company’s budget in check. 

But leasing new vehicles is a good way to ensure you don’t run into a financial predicament. It is a smart financial move that provides a variety of benefits over buying a brand-new car for your business. Let’s check them out!

What Is Car Leasing?

A car lease is a financial agreement with a dealership where you rent a car for a specific number of miles and duration. A monthly lease has to be paid for the agreement to work. At the end of the lease, you have the option of buying the car or returning it back to the dealership. 

The concept is very similar to renting an apartment — you pay to drive the leased car for a limited amount of time. This is usually 24-48 months, depending on your needs. You might be thinking that this is just like a hire purchase agreement (and it is). But there are a few subtle but important differences between the two, which you can read about in this car lease vs hire purchase guide.

Interestingly, leasing is becoming a popular choice among consumers. According to a report by Statista, nearly one-fifth of new vehicles in the United States were leased in 2022. So why are so many people leasing cars instead of buying them outright? Let’s find out!

6 Benefits Of Leasing A Car

1. Low Monthly Payments

One major advantage of leasing a car is low monthly payments. According to a report by Experian, in 2021, the Ford F150 had an average monthly lease payment of $542, while the average monthly car loan payment was $768. That’s $226 worth of savings! 

The reason is that you have to pay only for the car’s depreciation over the lease term rather than the full purchase price of the vehicle. This makes leasing a good financial choice for solopreneurs and small-scale business owners who want to maintain a good cash flow.

2. Low Repair Costs

Since a lease lasts only for 3-4 years, there are minimal repairs for you to cover as most of them come under warranty. But major repairs like an oil change or vehicle damage in case of accidents might not be covered by vehicle warranty. 

Therefore, it’s important to go through the list of repairs under warranty before leasing your vehicle so that you’re aware of the potential costs that you might have to pay. 

3. Tax Benefits

If your leased car is used for business purposes, chances are that you can get tax deductions based on the tax law in your state. In the U.S., the Internal Revenue Service (IRS) allows business owners to deduct a portion of their lease payments as a business expense on their tax returns. 

The amount that can be deducted depends on the percentage of business use of the vehicle, as well as the lease payment amount and the vehicle’s value.

4. You Get A Vehicle Of Your Choice

When buying a car, it can get a bit difficult to get the vehicle of your choice due to a limited budget. But that’s not the case with leasing. Since the cost of monthly payments is low, it opens the door for you to lease the luxury car of your dreams without worrying about the price. This is especially good for small-scale business owners who wish to make a lifestyle statement with the cars they use.

5. Easy Return Policy 

At the end of your lease, you will have three options to choose from. If you like your car and feel that it is being offered at a good value, then you can purchase it.

But if you didn’t like the vehicle, you can either return the car or get an upgraded model on your next lease. This is a good option if you’d like to keep your business fleet updated without breaking the bank.

6. Gap Insurance

All dealerships provide gap insurance on leased cars, which is useful in case of an accident or theft. While comprehensive car coverage or collision coverage will only cover the actual cost of the car, this doesn’t help because the value of a totaled car depreciates quickly. 

This is where gap insurance comes in. It covers the difference between what your regular insurance pays and the amount that’s left on the lease, meaning you won’t have to pay anything out of your pocket in case your car gets totalled. 

It’s important to ask your dealership about gap insurance before signing the lease as it may not be available as an option if you intend to purchase the car.

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