What is business car leasing?
What is business car leasing?
Today, a very large portion of fortune 500 companies choose to lease vehicles and equipment instead of traditional financing or purchases. In the simplest sense, business car leasing is a hassle-free and cost-effective way to provide new business-use vehicles for your employees. Leasing allows business owners of all sizes to choose the best terms and number of kilometers to be driven. As a more attractive and flexible solution, you can lease any number of vehicles and choose the best combination of vehicles to meet your business needs. If you are looking for more information about what business car leasing is, then you have come to the right place at Pfaff Leasing. With locations in Calgary, Vancouver, and Toronto, our customers have plenty of options when it comes to leasing cars for their businesses. In this blog, we share more information about what business car leasing is and how your business can take advantage!
A closed-end lease vs an open-end lease
When it comes to leasing vehicles for your business, you can choose between closed-end leases vs open-end leases. The differences between these two options include:
Commonly used by consumers, closed-end leases are the standard, every-day vehicle lease. In a closed-end lease, the lessor or finance company will assume the depreciation risk. If you (the lessee) exceeds the number of allowable kilometers, you could be responsible for excessive mileage charges. At the end of the lease, you’ll have the option to purchase the vehicle at the residual value or return the vehicle to the lessor. While this type of lease may work for most consumers and some businesses, companies who drive significantly may not be best served by a closed-end lease.
Open-end leases, or terminal rental adjustment clause leases, are much more common for commercial use because these contracts allow you to assume the depreciation risk. This means you can set more flexible terms based on the needs of your business, even open-ended mileage restrictions, so your employees can drive as needed. At the end of an open-end lease, you can choose to purchase the vehicle for its residual value or pay the difference between the vehicle’s market value and its residual value. In other words, you’ll pay the bill if the depreciation on the vehicle is worse than expected.
What are some of the advantages that can be experienced with business car leasing?
Whether you choose an open-end business lease or a closed-end business lease, you’ll enjoy a unique set of highly attractive benefits. Sone of which include:
- Tax Advantages: Your monthly business lease payments maybe 100% tax-deductible as a business expense.
- Lower Monthly Payments: Business leases have significantly lower monthly payments in comparison to purchases.
- Lower Maintenance: Regular maintenance may be covered under your fleet management agreement.
- No Repair Expenses: Since the manufacturer’s warranty is likely to be in effect the duration of your lease, most repairs will be covered for no out-of-pocket costs. However, you’ll still be responsible for suggested manufacturer’s maintenance items, unless you opt for a maintenance package.
- Simple Turnover: At the end of the closed-end lease, you simply turn the vehicle back in without worrying about disposing of the vehicle or trying to sell it.
- Flexibility: You can customize your lease to best benefit your business. Whatever your business needs, Pfaff Leasing can help you find the perfect lease for you.
Business car leasing can be very beneficial. If you are still looking for more information about how you can lease a car, or multiple cars, for your business, then we encourage you to get in touch with a Pfaff Leasing representative in Vancouver, Calgary, or Toronto today!
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