Car ownership VS Car Lease
In today’s ever evolving world where opportunities strike at different times and you never know when you need to relocate and migrate to a new place, it is imperative that your selection of assets and ownership is examined carefully.
Owning a car can be a great investment and asset. If you regularly service it, you may not need to buy another car for very long, or perhaps be able to sell it for a good price when you opt for something new. You will also be able to drive as much as you want. And you can customize your car with accessories, add-ons, paint and bumper stickers, or aftermarket performance enhancers. This shall give you all the flexibility with your Car though it comes with a huge price at the start.
Leasing a car is much cheaper than buying it outright, because you’re only paying a small percentage of the total price. You won’t have to worry about the selling price or finding a buyer for it when you want to opt out, as the rental company will take it back from you. If you like to have the newest gadgets and technologies in your vehicle which keep on evolving, leasing may be your best option, as you can regularly upgrade to drive the latest models that you desire. You may also be able to rent Expensive Car at special prices when on offer that you have always dreamt for in life.
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Buying a Car would mean that you own it and it would in turn be an Asset under your sole ownership or else under the company you work for or your own. You may opt to buy it outright or over a financing option depending on its availability. Whilst when leasing the Car would be owned by the rental company with you having a set of understanding and payments set forth over time frames agreed upon with the company.
When you opt for buying a Car it would always have upfront costs involved for settling a certain amount and paying over the financing period or else settle the full amount. This can depend on the ability to source the funds and the price of the Car chosen. A Lease does not typically need a down payment and you may opt to agree periodic payments with the company for the Car selected on Lease. There may be some companies also offering option of Lease to own and it would be at times wise to compare the option if you intend to have the Car for a very long period of time.
Depreciation is a major issue when owning a Car as with time the value continue to decrease and repair costs increase. There may come times where the spares of an old car would also be difficult to find making it even more expensive to maintain a Car. Market value may also fall making the Car have no asset value for the owner. During a Lease the company is responsible for the depreciation costs and the selling of the Car thus all the hassle and worry of repairs and future value is not a worry for the Lessee.
Accounting concepts and standards for most of the countries want the treatment of ownership of a Car to be categorized as assets and depreciated over its life having no real impact on the taxes and saving. Lease would have the Rental expense deductible if the Car if not used for the complete life cycle and contract of the same are annual. This allows the company to save on Taxes and have the same cost expenses. There would also be a benefit of VAT recovery where the companies at Vat-able and having this claimed accordingly.
When owning a Car which over time would need a change the only way possible would be to have the same sold, scrapped, or accidental and non-repairable. It would also need a full amount of new Cash Flow to invest into a new Car. During a Lease of Car most companies would allow upgrades or change of Car at No extra Cost at any time if available or after lapse of the contract.
Last but not the least owning a Car means foregoing an opportunity cost of being able to invest the money elsewhere. There may be various opportunities on investments to give great ROI’s which may be used to lease a Car. During a Lease or Rental it would only mean payments are done on cycles and the upfront Cash available may be invested into a good opportunity available at the time.
Ideally there would be various considerations for a person or organization to look into when deciding on the ideal option on Owning or Leasing a Car. Smiles Cars would be willing to advice and see the best suited option for you today and you may contact us for free advice today!
