As your business grows, a vehicle is a necessary investment in boosting company logistics and easier movement. However, purchasing several cars may be an expensive endeavor.
Depending on the circumstances, it may be ideal to hire or purchase a motor vehicle for your firm. Here is a list of the benefits and drawbacks of purchasing or leasing a car.
Benefits of hiring an automobile
- First, hiring a vehicle can be beneficial to a business in terms of tax costs. Companies can claim car hire fees as part of business expenditure and get a tax rebate.
- Second, whenever you renew the car lease contract, you can opt to get a newer vehicle, and all you need is a small deposit followed by additional payments made later.
- As you hire a newer vehicle, you can get one under a manufacturer’s warranty. When this happens, you can save hugely on repair costs.
Drawbacks of hiring a vehicle
- If you don’t read the fine print on the lease contract well, you may end up paying an amount almost similar to a vehicle loan.
- The vehicle cannot serve as an asset for your firm. You cannot utilize the car as part of your financial purposes, such as securing loans or merchant funding.
- If your enterprise has a poor credit history, it might be difficult to secure a car hire contract. Even if you get one, the contract will come with strict regulations.
Benefits of purchasing a vehicle
- According to recent regulations, businesses can write off any asset priced at lower than $150,000 bought between now and end-year. If you purchase a vehicle and it spoils before then, you can claim the write off through a governmental scheme.
- As stated earlier, hiring an automobile can lead to expenses similar to a car loan. The best thing about a car loan is that after you finalize repayments, you own the vehicle.
The Drawbacks of purchasing a vehicle
- The vehicle’s maintenance charges will fall exclusively on the business. In case on any break downs, no third party firm will take responsibility.
- Lastly, you require a significant one-time sum of money to make the purchase. Renting a car can be cheap, especially in the short term.
A vehicle can have numerous advantages to any growing business. But the question is often whether to hire or purchase the car. Consider the above benefits and drawbacks next time you consider obtaining a business motor vehicle.
Author Bio:- Michael Hollis is a Detroit native who now lives in Los Angeles. He is an account executive who has helped hundreds of business owners get merchant funding. He’s experimented with various occupations: computer programming, dog-training, scientificating… But his favorite job is the one he’s now doing full time — providing business funding for hard working business owners across the country.