Lease or buy? | AccountingWEB

Lease or buy?

This is the main question I get from client's that have decided to opt for a company car.

I usually say get me the figures for the options and I will look at them for you.

Just wondered what other views my learned AW colleagues have.


nigel's picture

Cashflow (again)    1 thanks

nigel | | Permalink

The first thing that usually eliminates the leasing option is VAT - if the client isn't VAT registered, leasing is usually too expensive.

Otherwise I do the same, tell them to get some figures from the dealer and let me see them. In the past instalments under HP and leasing (net of VAT) used to be very similar. However, for clients who don't have a part-exchange or cash for a deposit, leasing is often the best option as they can get away with a much lower initial payment than they would under a regulated HP agreement. If they like to gamble, they can also opt for a balloon at the end of the lease and hope that the residual value of the vehicle matches it - this means they effectively only pay for the depreciation of the vehicle over the time they are using it.

Those very rare clients who actually have the cash to buy a car may be a different case. Faced with earning no interest on their cash but paying interest on a loan/lease/HP they often prefer to buy outright. In the current banking climate I usually encourage them to keep their cash and take out at least some asset finance, so they still have their own funds for a rainy day.

While bank loans and overdrafts may be harder to get for SMEs, asset finance still seems to be available and affordable, so it pays to make use of it while you can.

Old Greying Accountant's picture

The problem with leasing ...

Old Greying Acc... | | Permalink

... especially in this climate, is that you are stuck in a cycle. If you buy, you at least have the option of keeping the vehicle and running it in to the ground, with a lease although the monthly payments are cheaper, you have them for ever (but that said, you often have a peppercorn option to extend for a couple of years)!


Used car lease

Nomzam | | Permalink

Used car lease is an ideal option for people that want luxury cars but cannot really afford the high monthly charges they may have to pay if they opt for the option of getting a brand new car on lease.

car for lease

fpurves's picture

Ever decreasing circles..

fpurves | | Permalink

In addition to the buy or lease question I also get the should it be personal or company car... And I recall early on in my practice life one client also added in a question on top of a ltd or LLP?....
1 wasted Sunday later plus the most mammoth of spreadsheets with the workings of the all the different options.... I realised that there were more taxes involved in this comparison than I'd managed to have hot dinners in the week!!

If budget is low and you want

samuelkkellner | | Permalink

If budget is low and you want to get your transport then I suggest that you start looking for fixed salvage auction cars. It saves the 60 % to 80% of your saving money.

Add comment
Log in or register to post comments
Group: Company car group
A place to delve into all aspects of motoring with like-minded professionals