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Why Modern Businesses Should Lease Company Cars

Many businesses face the tough decision when it involves purchasing or leasing vehicles that are an integral part of the company. While there are still tax incentives available for those who buy their business fleet vehicles, leasing could possibly yield even more benefits to the business in relation to taxes.

What is leasing and why is it any different than buying?

Simply put, when a company or individual leases a vehicle, the lessee pays for the depreciation of the vehicle. An individual or company that purchases a vehicle pays for the entire amount of the car or truck. Leasing contracts can be negotiated in much the same way a purchase is conducted. Many reputable vehicle leasing outlets will negotiate with the buyer in terms of payment and mileage limitations.

Purchasing a new vehicle for fleet operations can ensure that the company or individual owns the property however as the vehicle age's, repair and maintenance costs can overshadow the savings in the long run.

Persons or businesses that lease can save substantially by trading their fleet vehicles in after the contract has expired for more modern and reliable products available. Having modern vehicles in a business's arsenal can also project a better image of the company. Customers and clients alike are more apt to purchase goods or services from a polished looking company with better and newer equipment than competitors who do not.

What are the tax benefits when leasing a vehicle or fleet of vehicles?

Tax benefits can differ from country to country and state to state. Most people who lease a business vehicle can 'write off' almost all the expenses associated with the vehicle. In order to take advantage of these tax incentives, records of use and costs must be kept in order to prove that the user of the vehicle used it for business only purposes. It is very common that maintenance, fuel, leasing payments and upfront fees be deducted from the company's taxes. With cash purchased vehicles, fewer tax deductions can be made by the company or individual. It is very important to consult a tax professional about the different tax codes and how they can affect the business.

What other factors should someone consider before leasing or buying?

When a person or company finances a vehicle for purchase, they are responsible for the vehicle until is paid off. Leasing offers a greater advantage to business owners as the vehicle can be returned with no or little penalty. The user only pays for the depreciation of the vehicle which can include mileage amount.

While some consider mile overage fees a detracting feature of leasing a vehicle, in most cases the depreciation seen in cash purchased vehicles can be far more unsettling in terms of overall costs to the company. In order to avoid penalties associated with over extending the mileage agreement, businesspeople should factor in their needs when negotiating a lease contract.

Flexible options also make leasing more favorable among businesses. Fleet management companies can also save time and money when it comes to vehicle maintenance and repair. Other perks can also include roadside services and other special programs. These programs can significantly improve the company's efficiency and personal safety of the employees operating the leased vehicles. Businesses have many different options in terms of the level of involvement with regard to maintenance and repair issues. Companies with a larger need for a considerable amount of vehicles should consider the services of a fleet management company. Some companies will take on the maintenance tasks themselves or turn to smaller automotive shops. Since most leased vehicle contracts are within the warranty coverage period, many larger repair items may be covered by the manufacturer. Abuse to the vehicle can however void the warranty of the vehicle.

Locating as well as ordering a commercial grade vehicle can be handled more readily by fleet companies and participating dealerships. Professionals in the industry are highly trained and involved with the needs of their customers.

Customers who wish to explore adding leased vehicles to their company can also receive discounts for signing contracts on multiple vehicles. Low or no down payment options can be available to the lessee and monthly payments of a leased car or truck can be markedly lower than financing to buy.
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Article Added on Friday, April 23, 2010
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