Buy or lease a car?

Which is smarter for the entrepreneur

If you need a car or company car for your company, you will wonder what is cheaper and more convenient: buying or leasing a car. Both buying and leasing have their pros and cons. When leasing, you have to pay close attention to what form of leasing it is. Only with a financial lease you are the direct economic owner of the vehicle.

Buying a car: advantages and disadvantages

When you buy a car, you immediately own it. You can do whatever you want with it. Whether you want to equip it with a towbar, lettering, commercial vehicle interior or luxury sound system, it is your car, so you can decide for yourself what you do with it. But you have to pay the entire purchase amount in one go. This obviously has consequences for the liquidity of your company. You also cannot write off the purchase in one financial year, which is not always favorable. In addition, you also have to take into account the maintenance and operating costs. Of course, simply being able to buy and pay for a car or company car has the advantage that you are not committed to anything else.

Leasing a car: advantages and disadvantages

To be able to make a good comparison, it is important to know the difference between the most common forms of leasing. With operational lease and private lease you only pay a fee for the use and in principle the car does not become your property. That is why it is better to look at the advantages and disadvantages of a financial lease . The car does immediately become your economic property. You can therefore simply provide it with lettering, have a special commercial vehicle interior built in and everything you would do with your own car. As an entrepreneur, you also enjoy the same tax benefits as if you were to buy the car right away. You can enter the interest that you pay in the case of a financial lease as a cost item and therefore also be used as a deductible item. You also pay the purchase price of the car in installments so that the purchase does not have major consequences for the liquidity of your company. Of course, with a financial lease you enter into an agreement that you are committed to for a number of years. Fortunately, in many cases you can redeem it earlier, if you would like.

Buying or leasing a car for business?

When comparing buying a car and a financial lease, we see that in both cases you are responsible for the costs of use (fuel, parking fees, fines, car wash), motor vehicle tax, insurance and maintenance. You can enter these costs as a deductible item in both cases. You can also reclaim the VAT paid. If you were to buy a car as an entrepreneur, you must pay for the purchase in one go. This reduces the liquidity of your company. As an entrepreneur, it may therefore be more favorable to lease the car. You then pay it in installments, so that the payment is also more or less synchronous with the tax depreciation period of 5 years. That way you still have enough money to make other investments in, for example, business assets. Entrepreneurs can also deduct the interest on financial leasing for tax purposes , so that the final costs can be much lower. Anyone who buys a car and pays for it in one go has no obligations whatsoever, except for the costs of maintenance and use. With a financial lease, the vehicle is collateral for the term of the contract and you have the obligation to pay the monthly installments and any final installment.

At 123Lease.nl we are happy to help you on your way! View our lease offer for the desired passenger car or commercial vehicle.