Purchase or lease? Lease or purchase? It’s the perennial - and possibly biggest - dilemma faced by fleet managers today.

A quick definition first. Leasing something - in this case a vehicle - means paying the owner for its use over a certain period of time and then returning it. If that sounds like renting, well it’s that too. The only difference is the length of time the user needs the vehicle.

US industrialist John Paul Getty once said: “If it appreciates, buy it – if it depreciates, lease it,” which isn’t a bad rule of thumb to follow, but of course it’s not always that simple. The problem is that there is no-one-size-fits-all answer to the lease/purchase question. It really boils down to a case of what works best in an individual instance.

If you’re wrestling with the problem, here’s a few questions worth considering before you decide what works for you and/or your company.

Do you want the latest cars and change them regularly?

Then leasing is the better option, especially if there’s likely to be a lot of mileage involved. It also helps towards the creation of a successful image, and that’s a key consideration for many companies.

Clearly it’s not the option if outright ownership appeals and many, for varying reasons, prefer long-term ownership during which they’ll drive a vehicle right into the ground. And as an aside to that, if the vehicle isn’t looked after you’re probably better off owning it.

Most lease companies expect a certain amount of wear and tear but will charge for excessive damage and that could prove costly. Bear in mind, too, that there are some leasing agreements which offer the option of ownership at the end of the contract.

Do you want to free up cash flow and keep monthly payments down?

Lease payments are typically lower than those of a loan or HP repayment because they’re seen as only paying for the use of the vehicle and not the entire thing. For the aspirational, it often brings more prestigious makes of vehicle within reach and that helps, too, with the freeing up of cash which can then be put to good use in other areas of the business.

Appreciate depreciation?

You can’t avoid it and with the average brand new vehicle losing about 60% of its value within the first three years of purchase, instances of owing more than the car is worth to a finance company which provided the purchase loan are common. Lease a vehicle and you’re only paying to use it.

Worry about warranty and running repairs?

Leased vehicles are always covered by the manufacturer’s warranty, as long as the lease period is under three years and within the usual warranty mileage of 60,000. It is widely recognised that most warranties last for three years as problems are more likely to occur after this period. Buy a vehicle and eventually you become responsible for all ongoing maintenance and repairs which could soon eat into a budget. Lease it and you have peace of mind that any faults which crop up will be covered.

Do you get a buzz from buying/selling a used vehicle?

If you don’t than leasing is your answer. You just hand it back at the end of the agreed period, take out another lease and enjoy a new vehicle again. No hassle of selling or bargaining for the best possible price in part-exchange. Simples!

How regular are your business circumstances?

They need considering because if, for any reason, you have to terminate the leasing period early you could be faced with a prohibitive termination fee. Likewise with your likely annual mileage which needs to be estimated as accurately as possible. If things change and you find you’ve accrued more than you originally expected, an excess mileage charge awaits. If you find that you are doing more while the contract is still current, it is possible to amend the estimated mileage, but your monthly payments are more likely to increase.

So there you have it. Of course these are just a few of the basic considerations but there’s plenty of professional impartial assistance out there to help you make your decision which, ultimately has to be based upon weighing up the pros and cons to determine which choice suits best.