Should I Buy or Lease A Car? - Pros & Cons for Business Owners

It's time for another vehicle. However, with the "rules" changing related to remote work and unique tax issues affecting our finances, the considerations that made choosing buying vs leasing might also be changing. CERTIFIED FINANCIAL PLANNER Jeff Jeter joins us as we discuss some pros and cons of buying vs leasing a car and the practical realities as they relate to small business owners.

TOPICS DISCUSSED:
0:07 As A Business Owner Should I Buy Or Lease A Vehicle?
0:21 Things to Consider Before Deciding
0:34 How Far Do You Drive?
2:38 Recurring Payments & Love of New Cars
5:20 Simple Math - 4 Years
7:25 Short On Cash, Strong On Credit
8:38 Do You Use Your Car for Business?
8:50 Standard vs Actual Expense tax deductions:
11:09 Cleanliness & Customization
12:40 Summary

The PROS of Leasing a Car for Business
• Your monthly payments are typically lower than they would be if you were buying a car.
• Your down payment requirement is usually lower.
• Typically, you don’t have to pay any up-front sales tax because you’re not purchasing the vehicle.
• You’re never upside-down in the car. In other words, you don’t owe more on a loan than the car is worth.
• There’s a good chance that routine maintenance is covered in your lease agreement.
• New cars are typically covered by the manufacturer’s warranty, so you shouldn’t have to pay for expensive repairs.
• You don’t have to deal with pushy salespeople.
• You get to drive a new car more often.

The CONS of Leasing a Car for Business
• You never own the vehicle.
• You pay for miles that exceed the standard mileage limit.
• Most of the time, you can’t make modifications to the car.
• It’s hard to get out of a lease.
• You typically need pretty good credit to get the best lease results.
• You cannot depreciate a leased vehicle on your taxes.
• If you choose the standard mileage rate the first year, you must take that same rate every year.

The PROs of Buying a Car for Business
• The longer you own the vehicle, the lower your long-term cost.
• You can sell your vehicle anytime.
• No mileage limit.
• You can make modifications.
• You can depreciate the vehicle on your taxes.

The CONS of Buying a Car for Business
• You’ll typically pay higher up-front costs because you’ll owe sales tax, title fees, etc.
• Your monthly loan payments will probably be higher than lease payments.
• Eventually, the manufacturer’s warranty expires, and you’ll have to pay for major repairs.
• Typically, the dealership doesn’t cover vehicle maintenance costs when you purchase a vehicle.
• If you depreciate the vehicle completely, you will probably owe a recapture tax when you sell it or trade it in.

USEFUL LINKS:
Jeff Jeter, WealthSource Partners: https://www.wealthsource.com/locations/knoxville-tn/
Standard Mileage vs. Actual Expenses article: https://financiallysimple.com/standard-mileage-actual-expenses-which-business-owner/
Work with Justin's team: https://financiallysimple.com/work-with-us/
NEW BOOK: Financially Simple's The Ultimate Sale - Selling your Business for Maximum Profit
https://financiallysimple.com/book/

BIO:
Justin A. Goodbread, CFP®, CEPA, CVGA, is a nationally recognized financial planner, business educator, wealth manager, author, speaker, and entrepreneur. He has 20+ years of experience teaching small business owners how to start, buy, grow, and sell businesses.

DISCLOSURES:
Investment advisory services offered by WealthSource® Partners, LLC (“WealthSource”). Nothing herein constitutes an offer or solicitation to buy or sell any security; this video is distributed for informational purposes only. Furthermore, nothing herein should be considered as investment, tax or legal advice and/or used to make any investment decisions. You should consult with a professional adviser to see how the information contained herein may apply to your individual circumstances. All investing involves risk of loss and nothing herein should be construed as a guarantee of any specific outcome or profit. Past performance is not indicative of future results. All market indices discussed are unmanaged, do not incur management fees, and cannot be invested in directly. The statements and opinions expressed are those of Justin Goodbread and do not necessarily represent the views and/or opinions of WealthSource. All statements and opinions are current only as of this video’s original publication date and are subject to change without notice. WealthSource has no obligation to provide revised statements and/or opinions in the event of changed circumstances.

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

#buyingvsleasing #buyacar #leaseacar #smallbusiness

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