Company cars are a fact of business life, the only question is how best to finance them. Enter Business Car Leasing, a formal agreement to lease a new car at a set price for a set period of time. At the end of the contract period, you simply give the car back – job done.
Business Car Leasing has many advantages for small businesses. Is it right for your enterprise? Only you can tell; it all depends on your company’s financial circumstances and the specific requirements of your business.
However, by carefully considering the 5 positives below to help you make up your mind, you’ll be able to have an informed conversation with lease car companies and take an intelligent business decision.
No worries about capital depreciation
Protect your business from depreciating assets, new cars being a classic example. Rather than buying your company cars and tie yourself up financially, a lease arrangement can help you smooth the cost of motoring.
All you have to worry about is paying a set monthly figure for a set period of time, which is much easier to budget into your business finances. Choose from 24, 36 or 48 months, set your mileage allowance (from 8,000 per year), upfront deposit (3-6 monthly rental payments) and consider an optional maintenance plan.
Finally, when it’s time to return the car at the end of the contract period, the vehicle’s actual value is not your problem, and neither is selling it.
No negative impact on cash flow
Whether you need one company car or a whole fleet, the capital outlay required can be eye wateringly expensive. You may have to dip into the company account, arrange for an overdraft or take out a loan to finance your purchase.
Leasing is a much smaller financial commitment, meaning you can invest your finances into the business and improve your cash flow. In effect, Business Car Leasing acts like an extra line of credit, freeing up money that would otherwise have to be put into financing your business motoring needs.
No need to use your cash on a depreciating asset such as company cars; you can put it back in to grow your business instead.
Wide range of cars to choose from
Business Car Leasing is a mature and competitive market with many leasing companies vying for your custom. This is good for you, the customer, since it puts you in the best position to negotiate a good deal.
Decide on your budget and the car make and model that suits your requirements, then use this as the basis for shopping around for the best prices. Don’t forget to negotiate hard for optional extras too –upgrade specifications, roadside assistance, maintenance plans, insurance discounts etc.
Finally, make sure you find a proactive company with great customer service and remember: they need you more than you need them.
Driving the latest, safest vehicles
Arguably, driving a brand new car is one of life’s greatest joys. While you and your staff will drive around with a big smile on your faces, you’ll also be enjoying more tangible benefits. These include the best possible fuel economy, the latest in build quality and reliability, cutting edge in-car tech and safety features.
All of this will be immensely helpful for keeping your business running efficiently and safely, boosting staff morale and enhancing your company image.
Substantial tax savings
Business Car Leasing is subject to VAT. However, as a VAT registered business you’ll be able to claim half of this back, which could make a significant impact on your monthly payments. If your company car use is solely for business, such as in the case of a pool car with no private use, a 100% VAT back claim is permissible. In reality, though, most company cars include an element of private use, which would void the claim.
If you take out a maintenance plan in addition to the monthly business car rental, it is possible to claim all the VAT back on just the maintenance part.