If you don't think that classic car you've had your eye on for years can be a legitimate business expense, Ronald Wesley is out to prove you wrong.
Wesley, who owns Select Leasing in Hudson, just arranged a lease for a local business owner who had been searching for the perfect 1967 Corvette. After Wesley located the car, he leased it to the business owner, who now writes the car off as a business marketing expense.
The catch? He drives it for business purposes, and included a picture of it on his business card to help promote his company as a "classic business."
Wesley says the leases he arranges are designed so that the lessee can write off up to 100 percent of the use of the auto. He says that 80 percent of his customers are business owners who are looking for cars for themselves and fleets for their companies.
For companies, leasing makes more sense than purchasing, he says. For one, there's no recordkeeping for the IRS: If you use the car 80 percent of the time for business, you can write off 80 percent of your monthly payment.
He says that's why larger companies like Kinkos and IBM, for instance, lease their fleets. Wesley should know: He's not only a car enthusiast, he's also an accountant.
"You don't have to prove depreciation, as with a purchase," he says. "You have an instrument that shows exactly what your depreciation is. And you don't have to monitor fleet usage."
In addition, you don't have to tie up capital on the front end, because you're paying as you go, only for what you use. With the average cost of a new car today at $21,000, companies that need fleets of 20 or 40 cars can be looking at a huge up-front expense.
Wesley says that 79 percent of all cars costing more than $28,000 are leased. This year, Mercedes-Benz is leasing 88 percent of its cars; Cadillac is leasing 96 percent.
But even with the growing popularity of leasing, Wesley cautions against getting trapped into a vehicle you really can't afford.
"Everybody's using it as a catch-all, low payments to get people in. But that's not what it's all about," he says.
He advises that before you negotiate a lease, you should know how much you'll be driving and the amount of wear and tear you normally put on your vehicles. He says the ideal lease arrangement has no down payment and no end-of-lease charges, so the lessee is literally paying month by month for exactly what he or she is using.
But if you find you can't afford the payments on your dream car, there's still hope, he says. Try looking into a lease on a used vehicle. Wesley says he recently arranged leases on several year-old Cadillacs for one company, at about $250 less than the monthly cost of leasing a new Cadillac.
That's because most cars depreciate about 25 percent in the first year, and another 15 percent in the second, he says.
"Some cars, after two or three years, almost don't depreciate," he adds.
"As an independent leasing company, my interest is in assuring that my customers are driving the car they want or need at a price they can afford with the service they deserve," he says. "Obviously, a satisfied customer continues to lease and is the single greatest source of new business.
"Customer referrals account for nearly 75 percent of all of our business." How to reach: Select Leasing (330) 650-9900