It’s the age-old question for owners of growing businesses – is it better to buy or lease my company vehicle? The short answer is, it depends.
Buying a car is a significant outlay for your business, and monthly lease payments are generally less than car loan payments – in addition to usually being tax deductable. This makes leasing the most popular option amongst business owners.
However, there are some significant benefits to owning your business car. It means you’re in possession of a long-term asset with the potential for more tax deductions. You also can write off your petrol, mileage and maintenance expenses in addition to your interest payments on a car loan also qualifying as eligible business expenses. You’ll also enjoy lower insurance and liability rates on vehicles owned by your business. Additionally, leasing tends to cost more in the long run, and while the monthly payments may be more affordable – they don’t add up to an asset for your business.
It’s well worth doing a cost-benefit analysis before you commit either way, taking note of the car’s total cost over the car loan or lease term including:
-
Monthly payments, including interest
-
-
Maintenance, fuel, insurance, parking and other related costs
-
The value of the car at the end of the lease vs. the ownership period.
It’s the age-old question for owners of growing businesses – is it better to buy or lease my company vehicle? The short answer is, it depends.
Buying a car is a significant outlay for your business, and monthly lease payments are generally less than car loan payments – in addition to usually being tax deductable. This makes leasing the most popular option amongst business owners.
However, there are some significant benefits to owning your business car. It means you’re in possession of a long-term asset with the potential for more tax deductions. You also can write off your petrol, mileage and maintenance expenses in addition to your interest payments on a car loan also qualifying as eligible business expenses. You’ll also enjoy lower insurance and liability rates on vehicles owned by your business. Additionally, leasing tends to cost more in the long run, and while the monthly payments may be more affordable – they don’t add up to an asset for your business.
It’s well worth doing a cost-benefit analysis before you commit either way, taking note of the car’s total cost over the car loan or lease term including:
-
Monthly payments, including interest
-
-
Maintenance, fuel, insurance, parking and other related costs
-
The value of the car at the end of the lease vs. the ownership period.