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Leasing cars for business

Car leasing, as an alternative to purchasing a car, is an increasingly common practice for consumers. This method can take a lot of hassle out of car ownership, but can cost significantly more. But for businesses that offer company cars as a perk or as a necessity of the job, leasing cars can make a lot of sense.

Advantages of Leasing

The advantage of leasing cars is that the business won’t have to outlay cash to acquire the vehicle, but they get all the advantages of having it within their fleet. With leasing the business won’t have to accept the vehicle’s depreciation and they won’t have to deal with its disposal. As a lease is for a fixed period, the vehicle is at its best and should not develop problems.

Lease Payments

Lease payments are a fixed cost and are often lower than a car loan payment for the equivalent vehicle. Qualification for the lease agreement is often easier to achieve than gaining credit to buy the vehicle outright.

Lease Agreements

Lease agreements are for a fixed term. They typically provide an early termination clause that stipulates a fee to be paid if the business decides to cancel the contract. They are also limited to a set number of miles per annum and as mileage affects the car’s valuation, a high mileage limit leads to a more expensive lease agreement. With some agreements fees apply if the mileage limit is exceeded and other fees can apply if the vehicle is not returned in suitable condition. Some lease agreements cover maintenance costs like parts and service. These can also cover running costs like insurance and fuel.

Final word

The main drawback to leasing cars is that, in the long run, it costs more to lease a car than to buy one outright. Other drawbacks can be found in the agreements that stipulate an acceptable level of wear and tear and a mileage limit. These restrictions can lead to additional costs that the business may not have accounted for when they took out the lease agreement.

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