For most private individual buying a car to use is the way to go, but for many business owners choosing to lease with a long term vehicle rental option can be beneficial, not only for tax reasons but for cash flow also. If you are not a business owner, choosing to lease your car is probably going to cost more in the long run than buying, but for business owners it can be different.

First of all cash flow is the key to any business success, so being able to keep money in the business while renting a car can mean, more profit is made especially if this money is spent on marketing or employing quality staff. In short this money can be used to create money, rather than it sitting within a depreciating asset.

Then we can look at the tax benefits, in that as leasing a car is a business expense, you can set this expense against your tax liability. Normally the monthly premium a full rate and 50% of your vat, if you use the vehicles for private use, including coming to and fro form work. There is a downside to this, in that as you now drive a company car, you will pay personal Benefit In Kind tax on this perk you are getting form work, however the plus side is that the BIK is now calculated on C02 emissions rather than the miles you do, so if you choose the right car, you may find you are better off.

Deprecation is the key to monthly premiums with long tern vehicle rental, so choosing a car that has a better residual value will keep payments down. The good news is that popular cars tend to keep their value well, so unless you specifically want an unpopular car or an exotic supercar, there is a good chance you could be driving a vehicle you could not afford to buy.

The downside is the conditions often associated with leasing in that servicing must happen at the correct intervals and any damage to the vehicle must be repaired to their standards not yours. Of course your rental agreement will be based on certain mileage conditions also and you may be fined heavily by going over these limits. Very often the car your are renting is sold well before you hand it back, so they need to make sure they are compensated for anything outside your contract.

For private lease, many of the above benefits are lost, as you will not be able to claim any tax back, plus you have probably paid income tax on your earnings prior to the monthly payments, so private lease will be more expensive than buying. Even so in the USA, this is a very popular way of purchasing their cars, as many Americans prefer to mange their finances month by month, rather than by total payments. Anyway long tern vehicle rental can be right for some and not for others, so it would be wise to get more advice from a professional finance adviser.

Author Bio: Why not look at what long term vehicle rental options are available from independant operators.

Category: Automotive
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