Leasing Drones Vs Buying Drones

//Leasing Drones Vs Buying Drones

Leasing Drones Vs Buying Drones

By |2019-09-30T11:32:14+01:00September 26th, 2019|

Like any asset acquisition in business you need to consider how it will be paid for. There are many options from paying outright from cash reserves to leasing so its important to finance the purchase in a way that suits the business. Over the years we have seen many businesses decide to start using drones and after considering which one to buy make the purchase outright, in fact when I started my business this is exactly what I did and it was probably the biggest mistake I made when I started.   Oil baron Paul Getty once said “If it appreciates, buy it. If it depreciates, lease it.”   When you think about it this makes a lot of sense, in particular the latter part in this context and especially if you are starting a new business or if you don’t have a lot of capital.

Leasing is where you make fixed monthly payments sometimes with an upfront deposit as well but you never own the asset unless you purchase it at the end of the agreement (check this option is available to you before you sign any lease agreements). You can reduce the net cost of the lease because its classed as a business expense for tax purposes and is ideal if you have low cash reserves or want to preserve your cash in the bank however you need to ensure you are able to commit to the monthly payments. If you purchase the drone outright from cash in the bank you can enjoy the peace of mind of having no monthly payments and often negotiate a better purchase price but if you choose this route, ensure you still have enough funds for cash flow and unexpected costs.   If you own the asset you can depreciate the usable value of it over its lifetime which can be charged against your tax liabilities by claiming capital allowances, but you must be VAT registered to do this.

Advantages of leasing drones

  • You may be able to claim back part or all the VAT on the monthly instalments
  • You may be able to buy the asset at the end of the agreement for a low fee
  • You can purchase a high value of drone for a relatively low deposit and monthly payments

Disadvantages of leasing drones

  • You don’t own the asset
  • You may need to make an upfront payment of 3, 6 or 9 months in advance

Advantages of buying drones outright

  • No monthly payments
  • You may be able to get a better purchase price
  • You can modify the drone without breaking the leasing agreement
  • Claim VAT back

Disadvantages of buying drones outright

  • Reduces cash reserves
  • You pay for the depreciation

Our Verdict

Clearly it depends on the circumstances of your business as to which is the best method of purchase. If you aren’t sure, then it may be prudent to speak to a financial advisor or your accountant who may be able to guide you better based on your current position and strategy of the business. We can offer leasing from one of the UK’s leading leasing brokers who can offer leases to start-ups and established businesses, contact us now for more information or to arrange a quote on may brands such as DJI, Aerialtronics, ALTI, Parrot and more. https://caelusdrones.co.uk/contact-us/   Tel: 0333 987 4554

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