Business Vehicle Finance Options: Should You Buy, Lease, or Rent?
Every growing business needs an official vehicle, be it a car that the executives can use to attend client meetings or a truck that can deliver goods and equipment. When deciding how much to allocate, you have to evaluate the necessity of a vehicle in relation to the nature of your business. Factors such as credit rating, funding and vehicle acquisition, maintenance, and disposal costs should also be taken into account. Then comes the question of whether to buy, lease, or rent.
This is necessary if transportation is central to your business. The main advantage of this option is that once you pay off the costs, you can do whatever you please. The value of future resale may decline as you use the vehicle, but it also means you would not have to spend on payments every month. If wear and tear is a concern, you can make the most out of your vehicle through proper maintenance. You may customize it any way you deem fit, whether to carry company equipment or have it painted for advertising.
Some business vehicle finance companies in Perth offer financing arrangements like chattel mortgage. The financer transfers funds to the customer and the latter takes ownership when purchase is consummated. Major benefits include fixed monthly repayments and interest rates which can also be tailor-fit to your cash flow. Such a set-up can save you substantial money compared to arrangements with compounding interest. Also, repayments are not subject to GST and the transaction price can be qualified as a tax deduction if listed as business cost.
If your company can’t afford to take a huge chunk off your capital upfront, then you may opt for leasing because the monthly payments are lower. Benefits can include warranty, savings on maintenance and repair costs, and tax deductibility of the lease cost. Companies like Credit Group Australia Pty Ltd who finance car leasing in Perth offer various leasing options.
Renting a business vehicle is the best option if you can’t decide whether to buy or lease. It usually involves a short 12-month contract, which gives you time to evaluate whether you can afford to purchase or lease the vehicle. Upon expiry, you can return the vehicle, extend your usage through a lease agreement, or convert it to a chattel mortgage and fully gain ownership of the vehicle after full loan repayment.
(Source: Buy or Lease, Dhs.vic.gov.au)