When you need new vehicle or plant or equipment, what is the best – buy or lease? The answer will depend on your specific circumstances, but there are some basic considerations that can help you weigh up the options.
The Advantages of Buying
Buying gives you certainty and ownership, at a higher upfront price, but a lower total price. Owning gives you unrestricted use for the lifetime of the item. You can alter it to suit your business, and you can sell it if you need to free up some cash. When equipment lasts for a long time and maintains its value, ownership can be a particularly good choice. The total price of ownership is usually lower than the total cost of leasing the item.
The Advantages of Leasing
Leasing gives you more flexibility, at a higher cost. It spreads out the cost of an expensive item – you don’t need to save or borrow the purchase price, and instead you make regular payments. You can return a leased item if it’s not working out, or upgrade to a better model as your business grows. If the item is something that quickly becomes obsolete, or that you’re likely to upgrade, or that you’re not totally certain is right for your business, leasing could be ideal. While leasing is generally more expensive across the lifetime of the item, it also frees up your money to invest in other areas of the business.
Making the right choice
Should you buy or lease your fleet? There is no right answer to this question.
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