The lack of resources is a common issue for entrepreneurs working on start-ups. For example, they may have to purchase equipment and technology for the company rather than purchasing that new vehicle they need. Although there are benefits to owning your vehicle, you can also benefit from a lease. In fact, recently car manufacturers stated that up to 31% of new vehicles are leased. These are reasons you consider leasing a vehicle.
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Tax Breaks
When you purchase vehicles, for business or personal use, you must pay sales tax on the entire purchase price. However, when you lease a vehicle, you only pay sales taxes on the value of the vehicle value during your leasing period. This can save you thousands of dollars in sales tax. This tax is also spread throughout the leasing period.
In addition, your company vehicles are depreciated over time on your taxes. The vehicle must be used entirely for business to be depreciated. However, some deductions may be available for vehicles that are used more than half the time for business. You may be able to deduct mileage and other vehicle maintenance, tax and other costs on both leased and purchased vehicles. In addition, your payments for lease cars can be deductible as operating costs.
Consistent Upgrades
When you lease a vehicle, the lease is for a limited period of time. As an entrepreneur, your image must project success, especially if you are seeking investors or financing. The great thing about leased vehicles is that you can upgrade at the end of your lease to a new car, which can then be upgraded when that lease is over. Luxury cars, which most business owners drive, are expensive, but you will be able to drive the newest luxury automobile without having to purchase a new vehicle every two years.
Vehicle Costs
Your goal as an entrepreneur is to reduce your costs. One way you can do that, especially for company cars, is to lease rather than Purchase Company and personal vehicles. Your lease payments are significantly less than a traditional auto loan payment.
When you purchase a vehicle, you typically have upfront costs, such as sales tax payments, down payments and licensing. Although you do have to pay for licensing, you don’t typically have to provide a large down payment, especially if you have strong credit.
In addition, you don’t have to pay for the maintenance on leased automobiles because the warranty typically covers any repairs. In addition, maintenance is often offered free of charge by leasing companies.
Additional Insurance
Most leasing companies provide insurance that covers your leased vehicle in cases of theft. If you are in an accident, this gap coverage also pays off the car if your personal or business insurance does not cover it. Vehicle loans do not provide this coverage, but leases do.
Other Considerations
When you are deciding between a vehicle lease and purchase, you need to consider a few things. First, how many miles will you put on the car during the leasing period? Your lease company will probably give you a mileage limit, and if you go over this limit, you will be charged at the end of the lease period.
Also, at the end of the lease, you will return the car to the leasing company. Therefore, you cannot use it as a trade-in for a new car purchase or give it away to someone else. However, you can get a new vehicle lease. A lease also gives you the opportunity to test out different vehicles, and if you like the car you leased, you can purchase that car at the end of the lease period.
Leasing or purchasing an automobile is an important decision, especially for entrepreneurs who are starting companies. Take some time and consider the financial and image benefits of leasing and purchasing a vehicle before you make your final decision.