If you’re trying to decide between leasing and buying your next business vehicle, one question is probably foremost in your mind:
Which option costs less?
Unfortunately, comparing the costs of leasing and buying isn’t as simple as it looks. To do it right, you must consider not just out-of-pocket costs but also
cash available,
the tax benefits of each option, and
the time value of money.
The Difference between Lease and Buy . . .
When you buy, you own the vehicle free and clear after you repay the loan. So you get the trade-in or sale value of the vehicle when you decide to get rid of it.
When you lease, the dealer or leasing company owns the vehicle, and you pay for its use over the lease term. When the lease ends, you can either buy the vehicle for a “residual value” stated in the lease or walk away and get a new vehicle.
How can you absolutely know whether it’s better to buy or lease? Easy. Just ask us.
If you buy, we’ll find the present value (PV) as follows:
If you lease, we’ll find the present value as follows:
Key point. We enter the numbers such as the cost of the vehicle, down payment, lease payments, etc., in our calculator, and the calculator generates all the information above—the details. And from those details, the calculator gives you the results, which look like this:
RESULTS: Buy or Lease?
In today's dollars, you should BUY
because this saves you $7,501
Three key points here:
You give us the numbers—we enter them in our calculator.
The calculator crunches the numbers.
You see the result in after-tax cash.
Questions?
TrueBlaze Advisors is here to help you make these calculations to decide whether leasing or buying is best for your business. Contact TrueBlaze Advisors today.