The Benefits of Business Car Leasing

Published on July 16, 2019
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Despite upticks in employee telecommuting and eCommerce, most businesses still rely on an automobile in some capacity. Whether it’s to transport employees to and from meetings, or to transport materials to and from a work site, having a vehicle makes for smoother operations.

But how should you acquire those cars? Should you buy them, or lease them? It’s a question that many businesses have to answer, but there seems to be a woeful lack of discussion online about the subject. Let’s clear the air: regardless of what you think about personal vehicle leasing when it comes to commercial vehicles, leasing just makes more sense.

When searching for a car for your business fleet, you look at three main aspects: cost, utility, and image. Leasing allows you to optimize each aspect. To illustrate this point, here are four benefits of commercial leasing.

Better Cash Flow

Leasing comes with lower monthly payments as opposed to purchasing since instead of paying a fraction of the full value of the car, you’re instead paying a fraction of the cost of depreciation (the full value minus the residual value after the lease term).

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Lower monthly payments are a noted reason why the average consumer makes the switch to leasing, but it’s even more consequential to a business. Saving money monthly allows businesses to free up cash flow, which can be reinvested to help the business scale and expand. To learn more about the cash flow implications of leasing, stop by Autoone.ca/commercial-leasing/ and check out their write-up.

Tax Advantages

Payments toward car leases are tax deductible based on the percentage the vehicle is used for the business. That can translate to major tax savings, which can be a boon to any business struggling to stay in the black. The tax advantages alone are enough for many businesses to make the switch over to leasing their company fleet.

Better Selection

Because of the value differential, you’re able to afford a better car when you lease as opposed to when you buy. Expressed another way: you are able to afford a wider variety of cars when you lease. Your C-suite might require a luxury car, where logistical arms of the business might require utility vehicles like vans, trucks or large cars. With leasing, you have a greater range of options at your availability.

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Higher Vehicle Turnover

High vehicle turnover may not seem important until you consider the cost and image benefits. Having the same car for 7-10 years – as you would with purchasing – means that you bypass many improvements in aesthetics, safety, and fuel efficiency that the automotive industry undergoes in that period.

Lease terms are much shorter, generally 2-3 years. That shorter turnover time allows your business to constantly take advantage of safety and fuel efficiency improvements (to save you money) and aesthetic upgrades (to improve your business’ image relative to competitors).

Switching your fleet over to leasing ranks as one of the easiest ways you can save money for your business, and there are virtually no downsides. It’s strongly recommended.

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