A plethora of expenses is involved while operating a car for your small business. You would have to include the vehicle cost along with maintenance costs, fuel costs, tolls, parking fees, insurance costs and the list seems to go on endlessly. The first question that comes to your mind is that what is better? Buying or leasing a vehicle. Though there are absolutely no stringent rules to identify and choose the best, there could be a whole lot of relevant factors to be considered before deciding if leasing is better than buying a business car and vice versa.

Cost Is Vital to the Decision

For several small businesses the determining factor relating to most expenses is the actual cost involved. However, when deciding between buying and leasing a car, the cost factor certainly is not set in stone. The initial cost involved in leasing a car is typically lower when compared to the down payments needed for buying the same car. Monthly lease payments usually are lower as compared to payments on a similarly purchased car. Frankly speaking, the drawback associated with leasing a car is that the car would always cost much more eventually than a purchased car. Moreover, leasing a car implies no ownership rights over the vehicle. Once the lease term is over, you would not be left with any equity. You would have no residual value to display against your investment.

Depreciation Is Bound to Happen

Cars lose a remarkable portion of their original value as soon as they are driven away from the dealership. This depreciation value would be figuring in your lease contract and so you would be having an idea about the exact value of the car when the lease agreement comes to an end. If you are buying a car or any other small vehicle for business use, you would have to treat it as purchasing a depreciating asset. However, if you buy the car, once all the payments are made, you could simply go on driving it for the longest possible till it is giving you acceptable service. Visit for all your car leasing solutions.

Tax Concerns

You would have two choices for finding out your tax calculations. You could either claim your real expenses or you could consider claiming standard mileage deduction. If you own a car and you want to make use of standard mileage deductions, it is essential for you to implement the method during the very first year you had employed your car for business services.  In the years to follow, you could opt for any of these two methods. If on the contrary, you consider leasing a vehicle, you could opt for either standard mileage option or actual expenses during the very first year you had employed your car for business purposes. However, you should carry on using the same method during the entire lease period including all the lease renewals.

Appearance Is the Greatest Advantage

When you lease a car you are constantly able to upgrade to a brand new model after every few years and you need not be concerned about any sort of bargaining and negotiating over a trade-in. This could be really advantageous if your business relies on appearance, especially, if you need to give your clients a ride in style. In case you are looking for a car that would be providing you many years of dependable and efficient service and if you are not looking for upgrading your vehicle from time to time then you could consider buying a vehicle as buying would be typically costing less eventually.


So the greatest benefit of leasing a car is actually lower out-of-pocket expenses while getting and maintaining a vehicle. Car lease would not be requiring any down payment and no upfront payments. Moreover, monthly payments are generally lower and you feel great in riding a new vehicle every few years. You would have to go through relatively fewer maintenance headaches in case of a leased car. Leased cars automatically have the advantage of free gap protection. Most importantly, with leasing a car, you no longer need to face the headaches and hassles involved in selling a used vehicle. Businesses are able to acquire a tax break. Tax laws would be allowing businesses to actually deduct monthly car lease payments as really an expense.

via Bill Archer

Bill Archer is a financial consultant in a leading consultancy agency based in California. He is an avid blogger and has built a solid fan base. He recommends reputable sites such as all your leasing solutions.