How Businesses Save Money by Leasing Commercial Vehicles
Businesses all over the country are building and renewing their fleets by leasing commercial vehicles. Although each company needs to decide what’s best for them, there are distinct advantages to lease agreements. The following will review some of those benefits.
Lower Up-Front Costs
When you purchase an automobile, typically you have to pay 100 percent of “soft costs” up front. These can include freight and other charges, which can quickly add up. Leasing commercial vehicles usually allows for financing a portion of these fees, allowing your business to keep that capital to use for further growth. Another advantage is that they often don’t require a down payment. This keeps even more money in the business bank account.
Smaller Monthly Payments
Lease agreements tend to come with lower monthly payments than with a loan on a purchased automobile. This helps keep cash regularly available for other business costs.
Shielding from Depreciation
What they say is true – a car’s value goes down as soon as you drive it off the lot. Trucks and vans used in the trades, delivery or other heavy industries can take a beating through daily use, further losing value. Leasing commercial vehicles protects your business from the losses due to wear-and-tear and depreciation. Every few years, you can turn in your automobile and start a new contract with a brand new one.
Maintenance
Trucks and vans tend to have larger engines and, therefore, higher servicing costs when compared with small cars. When failures occur, repairs can be costly. Specialty shops and dealerships may be the only option when it comes to such maintenance, where hourly labor tends to be high. Leased vehicles typically have a comprehensive warranty and service schedule. Peace of mind comes from knowing that unexpected failures won’t incur a large cost. Skilled mechanics are likely to be most familiar with newer automobiles, as training is fresh in their minds, and because parts are often on hand, repairs are handled speedily.
Tax Benefits
The tax code allows for the monthly payments of leased vehicles to be deducted as an expense, reducing your business’ tax burden. Additionally, just like with a purchased automobile, you can deduct fuel, parking, tolls and other business costs related to your vehicle on your return.
Although some companies aren’t run very conservatively, the more money that a business can save, the more opportunity it has to grow. Additionally, the more profitable a business is, the more chance there is for workers to enjoy a good salary and the occasional bonus.