Leasing vs buying – what’s best for work vehicles?
Need a work vehicle but can’t choose between leasing or buying it? To help you decide, we look at the pros and cons of each.
Weighing up whether to lease or buy your work car or van? Can’t decide which option is better for your business? Take a look at some of the pros and cons of each.
Should you lease your work vehicle?
Thinking of leasing your work vehicle? Here are some pros and cons.
The pros of leasing
- Regular maintenance – most lease contracts offer yearly servicing and even MOTs as part of the lease, so there’s less for you to pay out in terms of maintenance and repair.
- Smaller repayments – generally car leases cost less per month than a finance contract, saving you money in the long run! The up front cost is also usually less, so if you don’t have much cash to spare at the beginning you could get behind the wheel and start moving your business forward quicker than if buying.
- No loss in value – vehicles quickly lose their value once you drive them out of the garage. With a lease you don’t experience this loss and can usually swap your car for something new with no hassle.
- You can claim back VAT – leasing a commercial vehicle allows you to claim back 100% of the VAT on maintenance and 50% of the VAT on finance.
The cons of leasing
- Small print – it’s important to check documents carefully when leasing a vehicle, there may be extra costs for minimal damage to the car or going over mileage, which brings us to our next point…
- Mileage limitations – most leases set a limit on how many miles you can cover per year in your car, which might restrict your business.
- No equity – much like renting a house, you have nothing to show for your money at the end of the lease, with the only options to take out a new contract or eventually buy a car.
Should you buy your work vehicle?
Thinking of buying your work vehicle? Here are some pros and cons.
The pros of buying
- You own the vehicle – one of the strongest pros when buying a car is that the vehicle is yours to use freely, there’s no limit on mileage and no costs for damage.
The cons of buying
- Higher upfront cost – unless you take out a finance plan, you will have to find the money to pay for your car up front.
- Cost of repair and maintenance – now that the car is yours, you’ll have to foot the bill should anything go wrong or when it is due a service and MOT each year.
- Loss in value – okay, you paid £12,000 for your car but how much will it be worth in three years’ time? We can tell you now, it will be significantly less! The Money Advice Service estimates that the drop in value: ‘varies between makes and models, but typically is between 15-35% in the first year and up to 50% or more over three years.’
- You won’t have the latest model – the ability to change your car every three years with a leasing scheme means you will always be driving the latest, highest spec model but buying a car prevents you from enjoying this luxury and having to sell your vehicle to get the next best thing.
For many businesses who want high quality vehicles at a more affordable price (and enjoy the benefits of regular check ups and free repairs), leasing often weighs up as the preferable option.
Where can you lease vehicles from?
If you’re considering leasing, you can take a look at sites like Lease Van that offer commercial fleet vehicles at affordable prices.