Ways In Which Vehicle Leases Benefit Small Companies

By Bill Olive

When companies are looking for a way to save money, they should consider vehicle leases rather than purchasing a fleet. The financial benefits can be realized immediately, and again at tax season. Many companies have found that the terms are much better than obtaining a bank loan to pay full price for the fleet.

The upfront and monthly capital is significantly less than purchasing. Since the majority of the payment will be at the end of the lease, if the leaser chooses to buy, the payments are quite a bit less per month and in the beginning. This allows any company more freedom to have additional vehicles at a lower cost.

The IRS often has different rules for leased vehicles. Because the vehicles are not purchased, the rules for depreciation are different. This usually means the full tax benefits can be realized in the first year, rather than waiting through the years based on IRS vehicle purchase rules.

A better debt listing on the corporate balance sheet can help in other ways. The fact that the debt can be listed with such a low obligation allows the company to provide continued viability and show a lower debt ration. This makes it much more attractive to investors as well as potential credit sources.

An additional credit line is usually established for the purposes of the lease. This helps by keeping an already established bank line of credit available for daily operations uses. Also, the additional line of credit helps increase the companies credit score.

Reducing the monthly costs is just one immediate benefit of vehicle leases. While it is the most attractive, the other benefits such as reduced tax liability, additional credit reference, and better debt listing can benefit the company for years to come. This provides a win-win situation for any small and growing company.

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