One of the biggest responsibilities for companies operating in the real sector is transportation. In this context, the importance of having vehicles allocated for personnel use increases significantly. Therefore, if a company's operations involve goods transfer and deliveries, or if the nature of the work requires frequent mobility of company employees, the use of company vehicles becomes indispensable.
When comparing the prices of vehicle purchase and long-term leasing, you may notice that these two options initially have similar values. This situation may have raised the question in your mind, just like many other business owners: 'Should I buy or lease a vehicle?' But have you considered the expenses that your company vehicles would incur over their period of use? Well then, let us make this comparison for you this time!
Tax incentives for company vehicles present an apparent advantage to persuade towards purchase. However, in the case of needing not just one but multiple vehicles - which is the most likely scenario for operational processes - the existing advantages can become inevitable to be nullified. This is because taking either of the two paths to address this involves either allocating a significant portion of the capital or opting for a bulk vehicle loan.
The disposal of vehicles after a certain period of use may not be sufficient to offset the costs incurred during their usage. This is because, in addition to the depreciation of vehicles during their use, regular maintenance, insurance, taxes, traffic insurance, and other expenses also add up to the cost. So, don't you think all these are compelling reasons to reconsider?
Vehicle & Fleet Leasing
Long-term leased vehicle expenses are nearly equivalent to the purchase prices when compared over the same vehicle. Therefore, some company managers may prefer to allocate the same budget to a purchase. However, when a long-term evaluation is made regarding car leasing, vehicle/fleet leasing;
- Just like in the case of a purchase, in addition to tax advantages,
- Monthly and annual cash management,
- Capital management,
- Exemption from maintenance, insurance, and damage expenses,
- And operational process planning, provide many more advantages.
The Maximum Expense Limit for Passenger Car Leasing Increased Further in 2023!
As is known, companies can deduct the monthly expenses of registered purchased or leased vehicles within a maximum limit from Corporate Tax. The amount that can be recorded as an expense was up to 8,000 TL (excluding VAT) for passenger cars in 2022 for both purchase and car leasing, while in 2023, it can be shown as 17,000 TL!
The increase of 9,000 TL in the maximum amount for deducting vehicle expenses from taxes means that the monthly lease payment per vehicle will decrease even further, resulting in a positive impact on the company's profit. Considering that usage-related expenses are not reflected in the monthly invoice for leasing, this adds another "yes" to the question, "Is annual vehicle leasing logical?
Fleet Leasing - Vehicle Purchase Comparison
When it comes to vehicle purchase, it is possible to list the potential expenses that may arise after the purchase in the simplest form as follows:
Purchase and Usage
- Vehicle purchase price
- (In case of taking a loan) total interest payment
- Motor Vehicle Tax (MTV)
- Traffic insurance
- Comprehensive insurance (Kasko)
- Corporate Tax
- Summer/winter tires
- Periodic maintenance, etc. services
- (If needed) vehicle replacement
- Personnel expenses for operation management
Used Car Sale
- Income Tax on Second-Hand Sales Profit
- Value Added Tax (VAT) Payment on Second-Hand Sales
In long-term vehicle leasing, the expense items that you can include in your budget planning are limited to the following:
- Monthly lease amount during the leasing period
- Corporate tax
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When compared to purchasing, the advantages of fleet leasing being more substantial is undoubtedly a significant factor among the reasons why companies opt for long-term vehicle leasing. When delving into the details, each of these advantages becomes a strong reason of great importance. For example;
- Opting for long-term leasing instead of purchasing allows for more efficient utilization of the company's capital.
- Monthly expenses for vehicle usage in long-term leasing are fixed and clearly determined for each month (independent of inflation effects).
- The Corporate Tax payment for long-term vehicle leasing is lower compared to purchasing.
- In leasing, there is no need to allocate extra budget and workforce for insurance and comprehensive coverage.
- In long-term leasing, the monitoring of operational processes is handled by the representatives of the leasing company, eliminating the need for assigning an operation manager within the company.
- In fleet leasing, the entire Value Added Tax (VAT) payment can be held within the scope of deductions, whereas in purchasing, VAT payment cannot be utilized for deductions.
So, how about benefiting from Hedef Filo advantages even for your car rentals that are less than 12 months? Short-term car leasing is now much easier with Filomingo, the online platform within Hedef Filo! Come on, discover this new generation experience!