A lot of companies across the globe prefer to lease vehicles instead of purchasing them. Business leasing of cars is a hassle-free and cost-effective way to get the needed vehicles for your people. It allows business owners of various sizes to get the best terms and number of miles that need to be driven.
It is an attractive and flexible solution which allows your business to lease any number of vehicles and also select the right vehicles to meet the business requirement. But you need to ask the right questions before choosing a leasing provider:
Question-1: What Kind of Leases Do You Offer?
When it comes to choosing leasing vehicles for the business, you have the following options:
- High Residual Value
- Low Residual Value
- Finance Lease
HRV are the regular vehicle lease in which the lessor will take the depreciation risk fixing the mileage term and the length of the lease as well. If you exceed the allowable miles, you would be responsible for extra mileage charges. Once the lease ends return the vehicle to the lessor. Although this type of lease may work best for most consumers, larger companies may not find it suitable.
LRV are far more common for commercial use they allow you to take the risk of depreciation of the vehicles. It allows you to have more flexible terms based on the need of the business. It can have open-ended mileage restriction so that you can drive as needed. Once this lease ends, you can choose to purchase the vehicle by paying the residual value.
Finance Lease – A leasing company in this case buys the asset for the user and rents it to lessee at a pre determined interest rate. The RV in this case can be as low as 1% in some cases and the once the lease ends, lessee has an option to purchase the vehicle at the end of the lease tenure.
Question-2: What Benefits Will I Get?
Irrespective of which lease you choose, certain benefits come along:
- Tax Savings for corporates – Your monthly business lease payment is 100% tax deductible as a business expense.
- Lower Monthly Payments – Business leases have significantly lower monthly payments as compared to the purchases.
- Lower Maintenance – Regular maintenance may be covered under the fleet agreement.
- Lower Up-Front Costs – You will not have to make payment as in the purchasing the vehicle upfront.
In the End
These are two key questions which you need to ask before going for a business lease so that you can get the benefits you desire.
Sunder is a techie guy who loves to write about anything that is directly or remotely connected with technology. From hardcore tech stories to the overall influence of technology in life, Sunder is passionate about all things internet. When he is not surfing the internet, he is busy grooving on his favorite beats.