Business car lease, otherwise called “commercial car lease”,  is a leasing concept wherein cars are leased for business use or purposes. Generally, this is  a more convenient and inexpensive alternative than purchasing a car since businesses are offered a better way to manage their finances. Companies are not burdened with a large capital outlay and business car leasing offers a likely significant tax advantage at the same time.  In general, all expenses associated with a lease can be deducted, including up-front costs, monthly payments, insurance, maintenance, and repairs.

Most business car lease are “open end” wherein the residual value is set low. Monthly payments will be higher however the tax benefits are greater. The business lessee is responsible for the differential amount between the car’s residual value and the lease-end market value; although this is now minimized due to the low residual value from open-end type of car lease.

Make a mental note that if the leased car is used both for personal and business reasons, the tax benefits is only applicable to the business related expenses.