Since the economy is becoming more and more competitive these days, the impact on globalization has encouraged businesses to check on their expenses and save up on their capital efficiently. Businesses usually involve in lot of travelling and hence they need vehicles. They need to provide transportation and due to this fact most of the companies prefer buying their own vehicles. However, for long run this option of buying vehicle may not seem feasible as it adds up to their monthly expenditure which surely no firm would like to see in their monthly sheets. So, ultimately business is now resorting to Car Leasing option as it seems to be beneficial for their company in many ways.
What is Car Leasing?
Car Leasing is basically the type of financing which is just similar to renting a car for a specific period of time. In the leasing contract, you don’t own the car, but use the car as if it is your own vehicle and in turn you only pay the leasing company the charges for using the car and you are taxed on your monthly payments only. The company their lease the vehicle is referred as lessee and the leasing company are referred as leaser. Both the name of the lessee and leaser are mentioned on the insurance contract. But, on the vehicle title the leaser name is only mentioned and this is the reason why the lessee solely pays the taxes on monthly lease payments instead of paying the entire purchasing price of the car. The lessee only rents the car and pay the taxes for the time frame they are using the vehicle.
What Are The Advantages of Car Leasing?
There are in fact a variety of benefits associated with Car Leasing. It not only gives you the chance to drive new car, but also reduce the expenses which you would spend buying a new car. Leasing a car for longer period can help you save lots of money as you will be paying less compared to hiring a car for your business or buying a vehicle for business transportation. Some of the other benefits include:
- The lessee owe more for the car than what it’s actual worth and this prevents your business from experiencing “Negative Equity”
- Car Leasing helps the business entities to keep their credit line open for other options for investments
- The monthly payments are eligible for deduction on your monthly taxes
- Leasing a car is considered to be an expense when it comes to bookkeeping, rather than an liability or asset