Leasing a Car for Your Business
If you’re looking to invest in a car or a fleet of cars for your business, leasing can be a great value option. It’s important to understand the ins and outs of leasing before you get started though, so here’s a guide to explain business car leasing and help you on your way to driving away in your newly-leased business car.
What is Leasing?
Leasing a vehicle is a bit like renting a house of flat, in that you sign a contract to pay a monthly fee for the car over a set period, at the end of which you hand back the keys to the leasing company or renew your agreement. Unlike car hire, where you rent a car for perhaps a day or a week, car leasing is like long-term renting and sometimes includes the option to buy the vehicle over time. Leasing gives you the chance not to worry about the car losing value as it ages, and you won’t have to go through the stress that comes with selling the car once it’s time to upgrade.
Potentially this means that you could be driving a new model every few years – not something the average car owner can afford. With some business car leasing agreements you can even pay extra each month to cover maintenance costs, so that if any problems should arise with the car you won’t have to find the cash to repair it. The downside is that you won’t own the car at the end of the agreement, and that some leasing deals also come with mileage restrictions – charging you by the mile if you exceed the stated amount. This can really add up, so do a realistic calculation before you start of how many miles you actually cover in a year, then add at least 10% for any extra.
Leasing for Business
Though many private individuals choose to buy over lease, as they want to own the car as an asset, leasing is a great option for cars used purely for business purposes. The business owner isn’t saddled with a depreciating asset, and leasing payments can be declared as tax-allowable expenses. Furthermore, VAT registered businesses can also reclaim up to 100% of the VAT if the vehicle is used exclusively for business purposes. You’ll be able to choose a car from a range of manufacturers and models to suit your needs, which will also give you various budget options – as you might expect, the more expensive the car, the more expensive the lease.
You’ll be asked to agree on a contract outlining how long you will be leasing the car for, how many miles you drive each year and how much you are expected to pay each month for the lease and, if you want, maintenance. Generally, payments are taken directly from your account via Direct Debit, so you needn’t worry about missing a payment, and when you start the lease you’ll usually pay a deposit that’s around two or three months’ worth of payments. Check out Lease Car for a great range of makes and models to suit your business’s needs.