Why Leasing is the Best Option if You’re Self Employed

When it comes time to buy a new car there are three options. You can either pay in full and own it outright, or you can finance the purchase, which results in ownership once you pay off the loan or you can lease the car, which is essentially renting it.

Paying cash for a car is foolish to be honest, as your money could be investing in something else that will give you a return. A car is a depreciating asset and once you drive a new car off the lot it drops in value. Financing it is a good option, but if you are self-employed you might want to seriously consider a lease option. Here are some reasons that support this statement.

Tax write off benefits.

Now, you will always want to consult your tax professional and financial team, but it’s very common knowledge that you are better off leasing as a business owner, since you are able to write off the monthly payment.

“There are limitations of course, but as a general rule, the money you spend each month on your car when leased can be written off when it’s a lease,” says Darryl Howard, who teaches blogging for beginners. “When you have traditional financing it’s not always the same tax benefit.”

Talk to your tax preparer and see if your situation warrants the full benefit. If so, you can use the opportunity to get into a new car and receive a larger write off. It can be a win-win situation.

Newer model every two to three years.

When you buy a car you have to worry about selling it before it drops in value, but many times the total financing cost causes you to be upside down, which makes it very difficult to sell until down the line.

“When you lease you are only keeping it for a predetermined amount of time, which is typically between 24 and 36 months. When the lease is up you hand it in. Simple as that. This allows you to get into the routine of being in a new car every two to three years without having to worry about the value of the car and having a balance due,” says April Gillmore of ClickFirst. No worries, you get out of it every time and have the opportunity to get into something new and fresh.

All maintenance included.

When you lease the car is brand new so you will be covered by a warranty all the time, no matter what happens. This means you will never have to pay a repair bill. Most programs will also include the oil changes and regular maintenance in the lease payment, so it really is a no hassle option which is great for business owners with limited time.

“You don’t ever have to worry about anything other than putting gas in the car. Less time worrying about your car or what needs to be done, gives you more time to focus on building your business,” says Ignacio Soria of CANN & Co. While it may sound trivial, any time you can eliminate common things like this it makes your ‘job’ easier.

Lower payments.

When you lease you aren’t buying the car. “You are basically renting it, so the dealer is going to get it back when it’s only a couple years old and because of the mile restrictions (unless you pay) the car will still have a high resale value,” says Andrew Tran of weighted blanket company Therapy Blanket.

This is why a lease payment will be lower than a payment on a car that is financed through a bank for purchase. When you are able to write off the payment and it’s lower than a regular car payment you are in a winning situation.

Keep your eye on the dealerships, because there are often great lease incentives that you can take advantage of that will give you even a lower payment.

No depreciation concern.

When you buy a car you have to worry about the miles you put on it and the wear and tear, as it all lowers the value. When you lease you know going in what your payment is a month and how many miles you are allocated throughout the term.

“You don’t have to worry about losing money, because once your term is over you hand the car in and you are done. You don’t have to worry about reselling it,” says Karen Anderson of QLD Probate. “You have zero concern and zero responsibility.” The car is the dealer’s concern once you give it back.

Potentially lower car insurance cost.

It’s always a good idea to speak to your insurance agent to get rates for both leasing and purchasing. If you lease under your business it may protect you under some situations, while some self-employed individuals might need additional coverage, depending on what line of business they are in. Generally speaking, a lease will offer you a lower insurance cost.

You just want to make sure you are covered properly in the event you are in a car accident. If you are involved in an automobile accident you can learn more here. It’s important you get professional guidance from your insurance agent.

Easy roll-over terms and opportunities.

“When you lease and establish a relationship with a particular manufacturer or a dealership, you will often see that they are willing to go the extra mile to keep you in a car from them, so they will often extend specials toward the end of your term,” says Patrick Tracey of Osienv, a hazardous waste removal company.

This can be anything from early trade-in bonuses to get you into the newer model year sooner, or discounts to keep you from going to another car maker or dealership. Never just say you want them to put you in a new car. Tell them you are thinking about trying something else and watch how they roll out the red carpet. Make them give you an offer you cannot pass up. Heinrich Wunder of Merkur suggests playing hard to get: “If they feel the dealership might lose you to a competitor, either dealer or brand, they will do whatever it takes to keep you as a customer.”

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Why Leasing is the Best Option if You’re Self Employed