A car lease is a rental agreement which allows you to take the services of the leased vehicles. It comes with:
- Pre-determined tenure
- Fixed kilometer limit
- Vehicle management services
- Agreed rent
But why would you consider going for a lease? It is because of the various benefits that come along with leasing:
Benefit #1- No Need for any Down Payment
If your company goes for leasing, you will not need to arrange funds from reserves or working capital for making the down payment. Had you decided to buy the cars, you would end up paying 10-15% of the total cost of the loan that was needed to fund the purchase. Thus, you can use this money saved in core business operations to garner revenues and profits.
Benefit #2- You Save on Taxes
With leasing, you save on taxes on the rental that you pay for leasing the car. With an operating lease, the tax-savings are accrued on the total rental amount which includes principal and the interest as well.
Benefit #3- There Is No Capitalization
When you lease the car, your company will not have to show it as an asset in the accounting books. It is a more suitable option. You will not have to budget for the purchase in the first place. And when you are not taking any loan to buy the vehicles, the leverage ratio will be low as well in the book of accounts.
Benefit #4- Don’t Have To Worry about Maintenance
When you own vehicles, you need to make arrangements for their regular maintenance. You might even need a team to do so. But leasing sets you free. You will not have to keep a team for maintenance and upkeep of the car. All this will be taken care of by the leasing company.
Benefit #5- More Liquidity For Business
You will not have to pay cash at one go for the insurance and the road tax as they will be included in the monthly rental payment. It leaves with you more liquidity which you can use in other areas of the business.
Benefit #6- Easy to Dispose of the Leased Vehicles
Once the lease tenor ends, you will not have to take any pain to dispose-off the leased vehicles. The leasing company will pick the cars at the end of lease tenor, and all the risk lies with the lessor.
Wrapping Up
With so many benefits, vehicle leasing is the right business decision. Why not try leasing with reputed lessor?
