If you have a business that requires the regular use of a car, it is only normal that you would feel confused choosing between either financing the car or leasing it. While either choice is great depending on the nature and current and position of the business, you need to be sure when you select one. Before that, you need to know what the difference is.

1. Car financing vs. car lease
Financing a car translates to taking a loan to buy a car and paying it back through monthly payments, regardless of what the car’s value is at the time you pay off the loan. This can be extremely disadvantageous if a car loses value rapidly. On the other hand, car leasing is essentially paying rent for the car you are using until the end of the lease term.

2. Which choice is better for business owners?
When you are deciding on finance vs. car lease, you need to compare every aspect of both choices. Here’s a brief comparison of financing and leasing a car for business:

• Ownership
  The point of ownership between finance vs. car lease is much different in the case of business vehicles. The reason is the tax benefits that come along with the ownership of the vehicle. As a result of depreciation, a car lease does not provide you any tax benefits. On the other hand, owning a car through financing can make you eligible for depreciation deductions.
  In business terms, depreciation is considered a deductible expense on the cost of the car. In addition, you can be eligible for higher deductions through accelerated depreciation.
• Initial costs
  When deciding between finance vs. car lease, the initial costs are different for different cases. The initial costs for financing and leasing are down payment and security deposit, respectively. Depending on the vehicle you wish to use, along with many other factors, financing or leasing can be an equally good choice.
• Mileage
  A business can receive a deduction on mileage expenses for both financed and leased cars. If you travel more in an owned car, a higher mileage can lower its resale value. On the other hand, leased cars require you to abide by a mileage limit, and failure to do so involves payment of a penalty. So it depends on how much you use the car.
• Wear and tear
  If an owned car has noticeable wear and tear, its resale value starts getting lower. On the other hand, a leased car might charge a penalty if the car has suffered extensive wear and tear in your lease term.
• End of term
  If you have financed a car, it will eventually belong to you. When you have paid off the loan and you own the car, you have a great deal of freedom for using it as you want. Conversely, if you lease a car, you have two choices, either buy it or return it. Another option a dealer might provide is to start a new lease. So, if you need the car for longer, owning it might prove better.