Lease or loan: which is better?
It depends on whether you want to own the asset at the end. A loan builds towards ownership and the asset sits on your books. A lease is closer to renting, often with lower payments and a return or purchase option at the end. Your accountant is the right person on the tax treatment.
The detail
The honest answer is that neither is universally better, and anyone who tells you otherwise is selling one of them.
A loan suits assets you intend to keep and work for years past the term, which is most trucks, plant and machinery. You own it outright at the end and the residual value is yours.
A lease suits assets you replace on a cycle, or where keeping the commitment off the balance sheet matters. Payments are often lower because you are funding the depreciation rather than the whole asset, but you do not own it at the end unless you exercise a purchase option.
The tax and accounting treatment differs between the two and can be the deciding factor. That part is genuinely a question for your accountant, not for us.
Related questions
Can I switch from a lease to owning the asset?
Many leases include a purchase option at the end. What it costs depends on the residual set at the start, so it is worth knowing that figure before you sign rather than at the end of the term.
Which has lower monthly payments?
A lease usually does, because you are funding the depreciation over the term rather than the full purchase price. Over the whole life of the asset the comparison is less clear-cut.
Does a lease affect my borrowing capacity?
It is still a commitment and lenders take it into account, though how it is treated can differ from a loan. If you are planning other borrowing, mention it early.
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