Lease vs. Purchase
The benefits of leasing vehicles for your business include maximizing cash flow, simplifying accounting processes and freeing up bank lines of credit. Full service leasing companies not only serve as a source of funds, but also as an equipment expert and asset management tool.
Leases and loans are simply two different methods of automobile financing. One finances the use of a vehicle; the other finances the purchase of a vehicle.
Purchase
A purchase pays for the entire cost of a vehicle, regardless of how many miles it's eventually driven. Buyers typically make a down payment, pay sales taxes in cash or roll them into a loan and pay an interest rate determined by the lender. The first payment is made a month after the contract is signed. When leasing, only a portion of the vehicle's cost is what's being purchased. The portion that is being used during the time it's driven.
Lease
Other benefits of leasing include the option to not make a down payment, paying sales tax only on monthly payments (in most states), and payment of a money factor similar to the interest rate on a loan. Leases may also include extra fees and possibly a security deposit, items not part of a direct purchase. First payments are made at the time the contract is signed.
The short-term monthly cost of leasing is less than the cost of buying, according to Leaseguide.com. For vehicles with the same price, term and down payment, monthly lease expenses will be 30 percent to 60 percent lower than loan payments.
