When you run a small business there are so many things to consider and deciding whether to lease or buy your vehicles is just one of them.It’s a subject upon which everyone seems to have their own opinion, often clouded by their own experiences with their choice of dealership or vehicle supplier rather than the purchase vs lease aspect of the decision.Much thought will be required as to what is best for you, but we hope in this blog to provide some fact-based guidance to assist. Your particular circumstances may ultimately be key, but here are some questions you could ask of yourself: -
1. Is the price right?
With leasing, there’s no large up-front capital investment required. There may be a month or two of initial payments expected in advance, but this will be nowhere near the capital cost of the vehicle when buying outright. If you are only just starting up or have a need for a number of cars and/or vans all at once, then purchase may simply not be an option for you.
2. Are fixed costs a benefit?
If you prefer to know exact monthly outgoings and avoid peaks and troughs, leasing may provide the regular certainty you seek. As well as monthly repayments being equally split over the term, you have options to add other expenses such as servicing and maintenance. This removes the risk of many of the unforeseen costs (but may of course work out more expensive in the long run).
3. What’s your attitude to ageing?
As the lease ends (usually after 3 years) you have the option of ending, extending or starting a new one. This latter option means that you can have a brand new car every 36 months with all the mod cons and status that brings. You could upgrade as frequently/ more frequently if you owned, but with buying, selling, refinancing etc. you may be inclined to hold on that little bit longer.
4. Are you a fan of convenience?
Undoubtedly the cost of the vehicle over the term of the lease will be higher than if you had purchased outright. This additional cost covers the ‘convenience’ of having spread the payments and having obtained the vehicle(s) at a time when purchase may not have been a possibility. Just like a mortgage, you have to decide if you can live with the extra for the sake of convenience. Something else that is also of huge convenience, is the fact that the place where you have your leased vehicle from will conduct all services, and repairs needed – saving you the brunt of unexpected costs!
5. What’s your willingness to commit?
When you buy a vehicle you are in control of how long you keep it, how far you drive in it and what you ultimately do with it. When you sign a lease you are committing to regular monthly payments, a fixed period of ownership and a mileage limit specified up front – all for a car you will never own. If this works for you, that’s fine but if flexibility is a must then further thought may be required.
6. Do you get depressed about depreciation?
It’s a commonly known fact that your new car will lose 15-30% of its value as it leaves the showroom. Leasing companies essentially take on the vehicle depreciation, factored into the monthly payments. On the flip side, you can charge the depreciation for your own car against your tax (vs simply claiming your monthly lease costs as a business expense) so accurate calculation is advised to assess the real ‘depreciation hit’.
Time to think about what’s best for you
With so many things to consider, the car lease or purchase question is a big one. With experience in all types of car finance (including PCP, HP, Finance Lease and Outright Purchase), 360 Autoleasing can help you decide which may be the best option - financially and for your own peace of mind.
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360 Autoleasing East Midlands
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360 Autoleasing East Midlands is a trading name of DMA Vehicle Solutions Ltd. We are a credit broker and not a lender, we are authorised and regulated by the Financial Conduct Authority. Registered No : 798165
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