THERE are many reasons that some companies still prefer to buy their cars, but car leasing is becoming ever-more popular and, according to recent reports from industry experts at Glass’s Guide, the demand for fixed term contracts is only set to increase.
5 practical reasons to lease your new company car instead of buying
If you are looking to fix your costs, there is no real way to do this if you are buying your company car or fleet vehicles. This is because depreciation is largely unquantifiable until you come to dispose of the vehicle/s at the end of their life.
It is only at this time that you can calculate your losses on the car itself.
Tying up capital goes hand-in-hand with buying company cars instead of leasing them. Even if you choose to take on a finance agreement, it is likely that you will be paying 10% deposit and even more likely that your monthly payment will be much higher than a monthly leasing cost, where you are only paying off the depreciation along with any additional bonus or incentives that may be applicable.
If you own your car, it is likely that you will not take out a maintenance agreement so ultimately, the management of your company car/s will be an administrative burden, as well as a potentially costly one. If you decide lease, maintenance contracts are available at very competitive monthly premiums.
Have you really got the time to deal with the disposal of your company vehicles when it is time to change them? Either by advertising, trading-in or auctioning? Whatever method you choose is likely to leave you out of pocket or out of patience. If you time ordering your lease cars right, with the help of your chosen broker, you can simply switch over at the end of the lease term to a brand new car
Many businesses are tempted to go the used car route as opposed to ordering brand new cars and this is understandable
5. Used car pitfalls
Many businesses are tempted to go the used car route as opposed to ordering brand new cars and this is understandable; they are keen to avoid the initial depreciation drop. But adding used cars to the fleet can spell problems when it comes to upkeep, running costs and even higher benefit in kind costs for the drivers – new cars are getting more efficient all the time, with lower emissions.
Mark Day, Director of Vehicle Savers, said;
“Leasing is becoming increasingly popular and it is little wonder why – businesses and individuals can benefit from fixed-cost motoring on brand new cars that offer low running costs and have the benefit of low initial down-payments compared to traditional finance methods like hire purchase or lease purchase.
“In addition, contract hire is an off-balance sheet form of funding and businesses can claim back 50% of the VAT back from the monthly contract figure and 100% back from the maintenance element. If the vehicle is a commercial, or is used for business use only, 100% of the VAT can be claimed back from the total rental.
“Some of the deals that we have on offer work out much cheaper than buying and suffering the depreciation hit, especially where bonuses, incentives and bulk-buying discounts have come into play. This can mean that the rental is far less than owning the same car ever could be.”