What about small businesses or contractors?

If you are self-employed, own your own business or use your vehicle primarily for business, you may want to lean towards leasing. Why? Because a good portion of the lease payment may be applied towards your federal taxes. In certain situations – like using a passenger vehicle as a way to increase your business – you can write off you annual lease payments.

There are some things to consider, though. You’ll need to keep a log book noting every detail and what the trip involved, along with gas receipts and other methods of proof just in case you get audited. If the vehicle is being used for both business and personal uses, you’ll only be able to claim the percentage used for business. There’s lots of anecdotal evidence that says claiming around 30 percent is a good way to keep the CRA off your back.

For sales reps who pile on 60,000-or-70,000 km annually visiting their territory, that might make leasing unattractive because most manufacturers won’t swallow end-of-term mileage that makes the vehicle unsellable after. And leases of four or five years start to lose their primary advantage because of the depreciation curve.

Similar concerns would go to tradespeople or lawn maintenance, but more towards having to return the vehicle in excellent condition. The chances are very high that the bed will scratched and dented, and the interior will take a beating from dirt and dust. And there need to be four matching tires on it or else you’ll get dinged for that too. Costs to ‘make it right’ could run into thousands of dollars if extensive bodywork is needed.

Any other costs to consider?

One thing not considered with the potential vehicle upgrade that’s possible with leasing would be the increased insurance costs of owning a newer and more expensive vehicle. It might not be a deal-killer, but don’t let it surprise you. Also, gap insurance might be a smart move since in case of a write-off would cover the full replacement value, not just how much it’s worth after depreciation. Better to let your insurance broker know what you’re thinking of doing ahead of time.

Another would be the question of reliability vs. desirability. Toyotas and Hondas might be boring appliances, but they last pretty much forever. Fiats and Minis and Audis and Volkswagens might look pretty, but should be purchased with an expectation that they’ll spend time in the shop, especially if kept past their original warranties.

But despite all the advances technologically in how cars are designed and assembled, no model is perfect. And there are exceptions to every rule: Even the most ‘reliable’ car company can produce a lemon, and there are some cars from manufacturers with terrible reputations that rarely give owners trouble.

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