Should I lease a luxury car for business


Should I lease a luxury car for business

Many business owners are leasing cars for business use. The attractive monthly costs and the ability to change cars frequently to keep up with new technology and safety features are appealing. But is a leased car right for your business? At Pfaff Leasing, we always have a big selection of luxury cars, vintage cars, and sports cars that are available for lease. If you are considering leasing a luxury car for business use, then you have come to the right place. There are many things to consider as a business owner if you are going to lease a luxury car for business purposes. In this blog by Pfaff Leasing, we talk about some of the things worth taking into consideration. 

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An open lease vs a closed lease 

When you sit down to negotiate a lease for a company car, you will probably be offered two options: an open lease and a closed lease. An open lease contract is used primarily for commercial (business) vehicle leases. In this type of lease, the lessee pays the difference between the residual value (estimated resale value) and the actual resale value at the end of the lease. If the vehicle is driven more than estimated, the actual resale can be low, resulting in increased costs for the lessee. In contrast, at the end of a closed lease, the lessee pays only extra kilometers and extraordinary damages.

The residual value 

It is a term used in car leases. It describes the value of the car at the end of the lease. The term “residual value” is also used to describe the amount a business expects to sell an asset for at the end of its useful life. The residual value is a function of the amount and rate of depreciation on the car or other business assets. The longer the term of your lease, the lower the residual value will be (because the vehicle will be older when you return it). Thus, you will pay more in total depreciation with a longer-term lease.

The taxes on the leased vehicle 

As always is the case in business financial matters, you’ll need to think about how taxes will work for the lease. You can deduct “ordinary and necessary” lease costs for a car you use in your business: The lease as a rent expense and if the lease is a conditional sales contract.

Leasing a luxury car for your business should be a pleasurable experience. If you have done your research and you are now looking for the right luxury vehicle to lease, then our Pfaff Leasing facility is the place to be. Our associates can sit down with you to learn more about your needs for a luxury vehicle lease for business. We can get you behind the wheel of the luxury car that suits all of your needs.

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