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Business vehicles: Should I rent or buy?

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Business vehicles: Should I rent or buy?

When you’re starting a new business, one of the dilemmas that you will face is whether to rent or buy a vehicle or vehicles. Renting and buying both have their advantages and disadvantages. In this article, we discuss which method of acquiring a vehicle might be right for your business.

Buying a vehicle

One of the biggest disadvantages of buying a business vehicle is that you will need to have a large amount of cash to hand to be able to purchase the vehicle. If you do not have the finances available to purchase the vehicle outright, you will have to arrange a loan or finance deal – which can be expensive and leave you paying for the vehicle far into the future, at a time when you may want to upgrade anyway. For startups on a limited budget and with little credit history, raising the total balance or securing a finance deal can prove challenging.

It’s important to remember that the value of your vehicle will depreciate as soon as you drive it off the showroom forecourt and you will never recover the original value of the vehicle, or anywhere near the original value, when you come to sell it. In fact, it’s been estimated that a vehicle loses 40% of its original value in just the first year of ownership!  You’ll also have to pay out should the vehicle need repairing during the time you own it.

The advantages of buying a business vehicle are that whilst it will depreciate in value, it will still have value and so can be sold should your business need a quick injection of cash. As you own the vehicle, you are also free to modify its appearance; a vehicle branded with your company logo, name and contact details can be a real asset when it comes to marketing your business. You can also physically modify the vehicle, which may prove useful for tradespeople requiring storage facilities for tools and equipment.

Leasing a vehicle

One of the main advantages of leasing a vehicle is that you do not need a large amount of cash. You usually only have to pay a deposit and then you’ll pay hire fees on a monthly basis. Rental companies such as Mayday Vehicle Rentals even offer flexible terms where, unlike with a standard lease, you are not tied into a lengthy contract. This can be very convenient because it offers adaptability should your business needs change. For example, if fluctuating business demand means that you don’t need the use of a vehicle for a couple of months, your rental agreement allows you to easily return the vehicle during the quiet period.

When renting or leasing, the vehicle’s maintenance and repair costs are usually covered by the rental company, which can be a real money saver should the vehicle break down whilst you’re using it.

Some leasing companies offer lease purchase agreements, which means that you could in future buy the car or van – a useful option if you find that the vehicle is well suited to your business needs, and that you would like to take ownership of it.

I am the founder of Startup Today. I am the main writer and have put in many hours of work into creating this blog. If you want to find out more about me then lets get in contact.

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