Business car leasing is one of the most effective ways for businesses and their employees to acquire and utilise reliable and effective transportation whilst simultaneously preventing you from having to deal with the downsides of getting into the driving seat through other methods, such as buying a vehicle. So, let’s find out how a business car lease could benefit you…
Is buying or leasing best for my business?
This can be a tough choice for any business, especially a new business. You’ve gone through the laborious nature of setting up your business to suddenly find yourself with the decision:
“Do I buy or lease my car?”
It’s not always a simple decision, there can be a lot to consider. But leasing your car can be a much more attractive prospect for a multitude of reasons. Firstly, business leasing reduces the upfront cost, which can often be a huge blow to your cashflow, particularly if your business is just starting out.
It’s important to consider the cost implications of depreciation too. When you buy a new car, as soon as it leaves the dealership, it has already lost nearly a huge percentage of its value. It’s instantaneous! The depreciation can leave a sizable dent in your investment and leave you with the hassle of offloading the vehicle when it’s no longer needed (which is rarely an easy task for anyone).
Ownership also leaves you with a lot more individual responsibility, particularly when it comes to ensuring maximum safety and reliability, especially in the case of providing vehicles for your staff. Insurance, breakdown cover, tax, recovery, and maintenance… It all adds up, and it can be a logistical nightmare to keep track of. Business leases tend to include all of these (and often a lot more) within the lease price/contract, all coming in under one easy-to-manage recurring payment.
Is there a benefit to leasing a car through my business?
Yes, there are even more benefits to leasing, especially when it comes to business contracts. The main one being that you typically get much better deals on your vehicle through your business. For example, in the UK, you can claim back at least 50% of the tax paid on your lease car, whilst low emission vehicles can claim up to 100% of the lease rate against their taxable profits! This makes the concept of leasing, that has developed a reputation with the uninitiated to be an expensive method of vehicle acquisition, to be much, much cheaper.
There are also other benefits of a business car lease, especially if you choose the right lease provider. The best way to ensure you’re getting the maximum benefit from your contract is to opt for a short-term business lease provider. This might sound counter-intuitive, but a short-term lease doesn’t necessarily always mean that you have the vehicle for a shorter period of time. These types of business leases give you flexibility – the flexibility to choose a lease term that suits you. You’re not tied into long-term commitments that leave you paying for a car that you may no longer need for years on end. Short-term lease contracts generally work on a rolling basis that provides you with the opportunity to take out a lease from anywhere between 28 days and 12 months at a time. In the case of the shorter contracts, such as 28 days or 3 months for example, you can constantly renew the contract in order to keep use of the lease vehicle, and you’re usually able to cancel at a time that suits you.
How long does a business lease last?
A typical business lease contract can last for anywhere between 2 and 4 years. This is quite the commitment. But as we’ve already mentioned, short-term lease contracts provide a much more flexible option. You can usually change your vehicle on a regular basis in a short-term contract too. That means that you and your staff can always be up to date with the latest cars, safety features and technology, which is always an important consideration.
What do I need to qualify for a business lease?
You need to make sure your company qualifies first of all. In the UK, you usually qualify if you are a limited company, a sole trader, a VAT registered company, or a liability partnership. After this, you’ll will need to submit documents like ID of the company owner(s) and director(s) to get you on the road.
If you’re a business owner looking for your next company car, maybe leasing is for you! There’s no need to buy a car outright nowadays. Leasing, particularly in the case of short-term contracts, is often a much more suitable prospect for businesses of all sizes.
So, there you have it, a quick guide to business leasing and how you can qualify for one. With its ever-expanding popularity and access to great vehicles and smaller upfront cost, it’s easy to why more and more businesses and moving towards leasing as opposed to more costly and stressful methods of vehicle/transport acquisition.
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