Are you considering whether to buy or lease a work Ute? When acquiring equipment, vehicles or plant for your business, you have the choice between buying or leasing.
When you buy an asset, you accept a greater level of commitment. Whether you buy it outright, or enter into a loan and borrow the funds, the asset is now entirely your responsibility. This includes covering all maintenance, repairs and eventually replacing the asset at the end of its life cycle.
When it comes to leasing, while you may not own the asset, less commitment is required. When your lease contract comes to an end, more options are available to you, including extension or non-continuation of the lease, upgrade etc.
So how to decide? If you’re thinking about a new Ute for your business, what are the pros and cons to leasing a vehicle? Let’s explore:
Pros to Leasing your work Ute:
1. Easy to upgrade the vehicle when lease expires.
2. Less money required up front vs buying.
3. Lease may cover repairs or maintenance, and vehicle is likely to be newer and under warranty.
4. Easier to manage cash flow, with your money not being tied up in a depreciating asset.
Cons to Leasing your work Ute:
1. Monthly repayments, fees and charges of lease could end up costing as much as a vehicle loan.
2. Restrictions on making any alterations to the vehicle.
3. The Ute cannot be claimed as your own asset for financial purposes.
4. Fees or charges to break the contract should you no longer require the Ute at any stage before lease expires.
Pros to Buying your work Ute:
1. Vehicle loans have similar repayments to leasing, but you will end up owning the Ute outright.
2. You’re able to claim the Ute as an asset for financial purposes (i.e. securing a loan, depreciation benefits etc.).
3. Freedom to make legal modifications to the Ute to meet your business needs.
Cons to Buying your work Ute:
1. Buying generally requires more cash upfront.
2. The Ute’s value will depreciate, making the investment less valuable over time.
3. If the Ute is used to secure finance and you fail to make repayments, it can be repossessed.
4. Upgrading the Ute in future will require you to sell before buying a new one.
If you’re looking to buy or lease a vehicle, plant or equipment for your business and don’t have enough finance to pay up front, consider taking out a small business loan.
Thousands of Australian small businesses require an additional cash flow injection each year. Apply online for a small business loan today.