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New vehicles – lease or buy?
Which is the cheapest overall?
There are advantages in both methods but you need to consider a wide range of factors before settling on the best option for you. The crucial point of your decision should be whether you want to take the risk on the vehicle’s residual value and maintenance costs, or pass this onto a lease company.
Many varieties of vehicle funding exist that can be tailored to suit your own company’s needs. The monthly outlay on purchasing a new vehicle can be reduced through deposits, final payment options, and competitive finance rates, to offer a similar monthly cost as a lease vehicle. You should also consider the benefits of not tying capital into a depreciating asset and making it work for your business.
In making your final decision, consider the following:
- Do you need to show the vehicle as an asset on your balance sheet?
- Could the money to buy a vehicle be put to better use in your business?
- Do you wish to reduce the complexity of accounting for a vehicle asset?
- Can you accurately predict the annual mileage of your vehicles?
- Can you guarantee that your vehicles will be returned in good condition?