Should You Rent, Lease or Buy a Car for Your Business?

Should You Rent, Lease or Buy a Car for Your Business?

If you own a business and need automobiles, you have a big decision to make. You can rent, lease or buy a car for your business. There are many factors to consider when choosing the best option to take for your organization. Here are some of the factors that can help you make this difficult decision.

How Frequently the Car Will Be Driven

If you are deciding between renting, leasing or buying a car for your business, you need to consider how frequently the car will be driven for business purposes. If you only need a car sporadically, renting a car as needed may make sense for your business. If you need a car more frequently, leasing or buying one may make sense. However, many leases will only allow you to drive the car so many miles per year before you incur higher penalty mileage rates. As such, you may be better off buying a car if your business will use it frequently.

Your Budget

Another factor to consider when deciding whether to rent, buy or lease a car is your budget. Leasing a car may be cheaper than buying one. And the amount you will spend renting one depends on the frequency in which you rent one and rates in your area. If you only need a car once a month, renting may be cheaper. However, if you need a car 20 out of 30 days, renting may be way more expensive. Take some time to research what it would cost to lease, rent or buy the type of car you are considering in your area to get a good feel for what each option will run you. Always pay close attention to your budget, as it will help you confirm which deal makes the best sense for your business.

Your Business Credit Rating

When deciding whether to rent, lease or buy a car, your business credit rating may impact your decision as well. Generally speaking, you will need to have good business credit in order to lease a vehicle. Business credit will also affect your ability to get a commercial car loan and the interest rate you will pay. While there are companies that specialize in getting car loans for those businesses with poor credit, you may have to put down a higher deposit, pay a higher interest rate or put up collateral in order to obtain the car loan. This is important to keep in mind as you make a decision.

Insurance Costs

The last factor to keep in mind as you decide whether to rent, lease or buy a car for your business is how much the insurance will cost you for each option. If you were to lease a car, you would have to carry full coverage insurance. The same is also try if you buy a car and make payments on it. However, if you buy a car outright, you don’t have to carry full coverage insurance. Commercial car insurance can be higher than personal insurance rates, because you are covering more drivers. Having employees take defensive driving courses and looking into other point and insurance reduction programs can help to lower these costs. However, before you obtain any vehicle for your business, it is important to do your research on insurance costs so you don’t spend more than your business can afford to.

Deciding whether to rent, lease or buy a car for your business can be a challenging decision. Ultimately, it affects your bottom line. However, taking the time to research the various options and considering how frequently the car will be driven, what your budget allows for a business vehicle, your business credit rating and insurance costs for each option will help you make the best decision for your business.

Categories: Auto

About Author