Best Car Lease Information

The term “business car lease” refers to the concept of leasing motor vehicles for use in business, for business purposes. It is also sometimes referred to as a commercial vehicle lease. A business car lease generally provides a more convenient and less expensive way to obtain a new vehicle without the upfront costs of financing to purchase.

One of the advantages to a business car lease is that the cost is spread over a number of years so there is no need for you to pay the entire amount up front which can significantly help maintain cash flow, which is critical to all businesses. Poor cash flow is known to be one of the major causes of small businesses failing and leasing can help you to keep your cash flow under better control.

A business car lease allows for better use of a business’s cash resources and offers potentially significant tax advantages at the same time. For the most part all expenses associated with a leased vehicle can be deducted including any and all up-front costs, monthly payments, insurance costs, maintenance and repair bills. It is important to remember however that any travelling you do for personal use cannot be written off as a business expense. It’s a good idea to buy a log book so you can record all of your business and personal trips and how many kilometers you travelled on each one, as well as fuel consumption costs. This is a good idea because if you are audited the IRS will want to see proof that what you claimed as business use was actually business use.

Many business car lease contracts are “open end” leases in which the residual is set low, which means it can create higher monthly payments, but greater tax benefits. The lessee is responsible for any differences in residual value and lease-end market value, but this risk is minimized by the previously mentioned low residual so there’s a pretty small chance that you will have to make up any difference.

Business car leasing can be beneficial to businesses that may need a fleet of work trucks or vans, as the payments will be lower than if you were to purchase them and you will be able to upgrade every 3 or 4 years. Some leasing companies may also offer you a deal if you’re leasing a fleet of vehicles rather than just one. You won’t have the hassle of worrying about any major maintenance costs as you’ll be returning the vehicles before big things like tires and brakes need to be replaced. You’ll also have the peace of mind of being covered under warranty for the duration of the time you’re using the vehicle or vehicles, and having 24/7 Roadside Assistance which means you’ll never have to worry about you or your employees being stranded on the side of the road when you go with a business car lease.

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