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Corporate Auto Lease: Things to Consider


It makes sense to assume that if you’ve decided to lease your vehicle or fleet of vehicles, you’ve already heard about the advantages of doing so.

A corporate auto lease offers a myriad of benefits, which includes more freed up cash flow to reinvest back into your company, tax deduction benefits, payments are usually lower than other auto payments, you get a manufacturer’s warranty, you have access to maintenance and management programs that can save you time and money, you get the flexibility of easy vehicle trade-ins and upgrades.

Another advantage includes having a newer model vehicle that won’t cause as much maintenance hassle as an older vehicle.

Things to Keep in Mind with a Corporate Auto Lease

Yet even with all the great advantages, there are some things you may want to consider before deciding, unequivocally, to lease.

Let’s explore a few:

It Costs More to Lease Than to Buy

If you do the math, you’ll find out quickly that purchasing your vehicle or fleet is more cost-effective, in the end, than leasing one. Leasing costs adds up. Whether or not this is an issue depends on your reasons for leasing, or business objectives.

Though leasing can save you lots of money upfront, you still have to take into consideration the fact you’re shelling out money for a vehicle or fleet that you will never own (unless you opt-in to purchase after the lease). Ownership gives you the advantage of being able to sell and make a profit after using the vehicle for some time.

This scenario is no different from renting versus having a mortgage. The first option gives you the opportunity to usually pay less each month, but money that’s being spent towards a needed expense that will never belong to you – even though you’re putting money on it every month.

The last option, on the contrary, is money spent towards a needed expense that’s going into you one day having ownership and no longer having to make regular payments. You also have the future option to sell or rent.

With a corporate auto lease, if you do eventually choose to buy, you’ve already shelled out months (or even years) of money towards leasing it – money that could have been going towards a purchase.

You also can incur an early lease termination fee for leases you cannot keep throughout the duration of the lease agreement. Again, similar to an apartment rental agreement.

You’re Usually Limited on Mileage

When you own a vehicle or fleet of vehicles, you can literally do whatever you want with that vehicle, including driving as many miles as you want. With a lease, you could be penalized for that. There’s usually an agreed number of miles you can put on that vehicle when you lease it.

Limitations in Alterations

Because a leased vehicle doesn’t technically belong to you, you’re limited in how “creative” you can get with altering it. Matter-of-fact, the expectation is you can’t make any changes at all. The vehicle or fleet must be returned after the lease agreement in the same look and condition you got it in.

No Room for “Fender Benders”

Though leases normally offer great repair options, you can be penalized for any wear or tear.

So overall, corporate auto leasing has plenty of advantages but there’s also cons. You want to consider both before making your decision.

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