Many businesses opt to lease their vehicles rather than own them outright. However, many car companies have a lease insurance requirement that must be met. Here are some other items business owners need to know before leasing a vehicle.
Unlike owning a car, a leased vehicle can only be driven so many miles per year. Anything over the agreed-upon mileage can cost the business extra money. Some lease agreements allow you to pay ahead if you know you will drive over their annual limit.
There are a variety of things that can affect the price of the lease. The most common are the down payment, the MSRP of the vehicle, lease length, residual value and sales tax.
Business owners can deduct business lease costs that are necessary and ordinary. You still need to calculate the actual mileage driven for business. Some leases are conditional and must be written off as a depreciation rather than deducting the full payments.
Expect to meet the lease insurance requirement by having property damage coverage and bodily injury liability per accident, as seen on Arroyo. While you may already have commercial auto insurance, make sure it matches the requirements on the lease agreement to avoid voiding the contract.
These are a few items to consider before choosing to lease a commercial vehicle. Carefully reading the lease agreement can help your business avoid unnecessary fees and headaches down the road.