When choosing to add new commercial vehicles to your
small business fleet, there are pros and cons to both buying and
leasing. What follows are some of the benefits of leasing a commercial
vehicle rather than buying:
When buying a commercial vehicle for your business
you make a down payment (usually of at least 20%), and make monthly
payments (if you set up financing through a commercial vehicle lender).
In this scenario you must pay sales taxes, and you are able to sell or
trade the vehicle at some point in the future. This gives you a certain
amount of flexibility as a long term owner of the vehicle, in addition
to the cost saving of not making monthly payments if you retain the
vehicle for a number of years after it is paid off.
One of the inherent risks here however, is the
potential for mechanical failure and costly repairs that will likely
occur as the vehicle ages, in addition to the fact that newer
technologies will inevitably cause some amount of obsolescence in the
vehicles capabilities over time. When leasing a commercial vehicle, on
the other hand, you are only paying for the cost of the vehicle that you
actually utilize during the lease period. Depending on the lease
incentive you may be able to save money by avoiding down payments and
other up-front or monthly lease related fees. Some states also do not
require sales tax to be paid for leased commercial vehicles. Some of the
most immediate benefits are the fact that you can replace your
commercial vehicle every two to three years and take advantage of all of
the latest technologies that are developed, in addition to the fact
that with a newer vehicle there is less risk of incurring the costs of
mechanical repairs and less long term responsibility for commercial
vehicle maintenance.
Additional benefits to leasing are that monthly
payments are tax deductible and some leases include coverage for repair
and maintenance of the vehicle. Since the vehicle can be turned in for
an upgraded model at the end of the lease, it removes the time consuming
process of trying to sell the vehicle, whereby a business may lose a
good amount of their initial investment due to the depreciating value of
the vehicle. Keep in mind, however, that leased vehicles may have
mileage limits, and charges when mileage has been exceeded, which may or
may not fit in with the needs of your business operation. Also, leased
vehicles cannot be customized to provide specific services, or for
advertising purposes the way that vehicles that are purchased can be.
For many businesses, however this is not a factory when choosing to
lease a commercial vehicle. One of the biggest benefits of leasing is to
have the vehicle covered under warranty which, even with an extended
warranty, would eventually expire if purchasing a vehicle. In the end,
while leasing a commercial vehicle rather than buying a commercial
vehicle may not be the right solution for all businesses, it no doubt
offers an enticing amount of cost savings, and worry free incentives for
most businesses, most of the time.
This post is shared by TrucklendersUSA, which is a 30
years experienced commercial financing company offering commercial
vehicle leasing, commercial vehicle financing and more.
