Purchasing vs Leasing – Evaluating your Needs

When getting commercial vehicles like limousines, sprinters and buses, you have two main options – purchasing and leasing, both of which have their fair share of pros and cons. If you’re having trouble deciding between the two, consider the following points:

Business needs: For what – and how long – do you need the vehicle? If your use will be sporadic or short-term, leasing is probably the way to go. If you’re looking for a long-term solution, your best option is to buy the vehicle, and take good care of it.

Down payment: When purchasing a vehicle, the down payment will be large – usually between 10-20% of the vehicle’s total cost. Can you afford that upfront? While leasing, on the other hand, there’s little to no down payment.

Interest rates: Purchasing a vehicle with payments made in installments comes with interest. You’ll pay more than the initial cost of the vehicle over the long term. However, in return you’ll have full ownership of the vehicle – which you can sell in a few years to recuperate costs.

Liability: If you own a vehicle, you are liable if it gets totaled. If you’ve had it for only a few months, you’ll incur a huge loss since you’ll have to pay the installments anyway. To protect yourself against this eventuality, consider GAP insurance.

Depreciation: As soon as a vehicle is purchased, its market value begins to depreciate. A year after purchase, it’ll be worth around 66% what you bought it for. If you don’t plan to keep it for long, leasing will allow you to acquire a new vehicle each time the lease expires.

Liability: If you’re making payments on a vehicle, you are still liable for them if it gets totaled. Your insurance may only cover up to its current market value. That’s what GAP insurance is for – it makes up for the difference between the market value and your remaining lease.

Maintenance cost: When you purchase a vehicle, all maintenance is your responsibility. A leased vehicle comes with full warranty. If you don’t want to worry about maintenance and potential repairs, the latter is right for you.