Three benefits of car leasing for your business
Much has been made about how people are travelling less these days. Many commentators have spoken about the ‘new normal’ of working from home and how video meetings are replacing face-to-face interactions. While this is true for some sectors, going online only simply isn’t practical for many others.
For most Australian businesses, being able to have someone jump in the car and make a site visit is invaluable. But, with budgets tighter than ever, finding the capital to buy and maintain a ‘work vehicle’ can be tough. And that’s not to mention the time and effort that goes into managing registrations, insurance, and regular servicing. There’s also the small matter of what to do with it when it’s time for an upgrade.
- You can pay as you go
With a car lease, your payments are spread out over the life of the contract. You don’t have to outlay a large deposit or find the funds to buy the vehicle outright. You effectively rent the vehicle of the financial provider and get exclusive use for a set monthly fee.
Also, if you choose a fully maintained car lease, your monthly payments will include most of your ongoing expenses. This means that the cost of registration, insurance and servicing will be spread out across the year. Not only does this make it easier to budget, it means there’s minimal risk of any surprise maintenance bills to pay.
- The tax benefits
When you have a car lease, your repayments are tax deductible. This is because you will not be the legal owner of the vehicle, so all of the cost is seen as a business expense.
There are a few important details to note here:
- If the vehicle is also used for personal purposes, you will only be able to claim the business usage. This will usually be calculated as a percentage of the total use.
- Your financial provider will claim the GST, so all repayments will be calculated ex. GST.
- You can outsource your fleet management
A car lease can is particularly beneficial if you have multiple vehicles as it’s basically outsourcing your fleet management. The financial provider manages everything from registering the vehicles to scheduling regular maintenance. All you and your team really needs to do is work out the type and number of vehicles you need.
Also, when you have a fully maintained car lease, disposal couldn’t be easier. When it comes to the end of the lease term (usually 2 – 5 years) you just hand the vehicle back. The financial provider assumes all responsibility for its resale, etc. and you’re free to upgrade to a newer model.
Choosing the right car lease
As with any financial product, there are a wide range of car lease providers. Each will have their own rates and requirements, so it’s important to do your research and shop around.