While choosing the best van for your business may be quite a simple task trying to determine whether it would be best to finance or lease the van is a whole different ball game that can be understandably challenging. Considering both options would come with its very own pros and cons, it may be tricky to establish the best choice for your financial situation. Depending on the size and success of your business, you will be able to determine the most appropriate solution.
Understanding Leasing And The Many Benefits
Van leasing is often considered the more affordable option for startups and small scale businesses as the more cost-efficient option of buying a vehicle. Essentially leasing a vehicle here will ensure you can keep your business expenses preferably low, which means your profit margins can be improved. Because vehicles depreciate in value over time, small businesses would benefit significantly from leasing a vehicle and not having to worry about depreciation.
Leasing allows drivers to rent brand new vehicles for a fixed period, basically with the option of purchasing the vehicle at a lower price. In addition to this, you would not have to worry about maintenance costs as this is usually included in your monthly payment. While purchasing a new car can be a huge financial set back for a small business leasing would allow business owners to drive a new van often. This means your business travel expenses would only consist of fuel costs and lease payments. What’s more, you may be able to take advantage of alluring tax benefits and deduction from leasing a business van.
Buying A Van At The Expense Of Your Business
Buying a van is not often an option for small businesses and startups as funds would logically be quite limited. A large upfront purchase may not be possible without enough business credit, and even then, it may not be the most suitable choice. Because purchasing a van means that you will have to worry about vehicle services, maintenance, and potentially costly repairs, the decision would be financially crippling initially and in the long run. Even though buying means the van is the property of the business, this may be the only benefit. Buying vehicles is, unfortunately, more appropriate for large companies who have already tackled cash flow issues and other financial challenged that startups inevitably confront.
Putting Business Growth First
As an entrepreneur, you will have to make money-savvy decisions with the success of your business in mind. This means that any financial decision that has not been carefully dissected will negatively impact business growth. It would be best to settle for a solution that offers the most benefits and allows you to keep your business expenses at an appropriate low. Should you decide to purchase a business van simply because you will be able to claim ownership, you should consider that the vehicle will depreciate in value from the second it leaves the dealership, which means you will be purchasing a liability rather than an asset for your business.
Check out my guide on how to start your business right with tons of useful tips I learned by successfully starting, building, and selling multiple companies.