Leasing a car through your business can be a very smart move - we’ve outlined some of the benefits of business car leasing, whether you're a sole trader or the owner of a Limited Company.
Car leasing offers many advantages for businesses when compared to buying a car outright or taking out a finance package
Here’s some of the benefits explained:
Lower Initial Rental
A major advantage of leasing is that you won’t need to spend big up front. With leasing offers from Little Green Car Leasing you can choose to pay 3, 6 or 9 months upfront and you’ll also have to pay the standard £199+VAT admin fee.
Fixed Monthly Costs
Fixed monthly leasing costs make budgeting a breeze. With leasing, your business is essentially paying for the depreciation of the car so the total cost is usually much lower when compared to taking out finance repayments to buy a car.
Your Road Fund Licence is included in the leasing cost too.
You’re in charge of choice
From the vehicle you want to drive, to your upfront payments and monthly costs you are in charge. You can also choose how long you lease the vehicle for and what your annual mileage will be.
Cash Flow Management
Car Leasing removes depreciating assets from your company’s balance sheet and the associated risks of owning a vehicle, such as depreciation and disposing of the vehicle.
Maintenance
Taking out a maintenance package gives you great peace of mind and again is a good way to budget.
VAT Claim Back
Companies that are VAT registered can claim back 50% of the VAT on the car leasing payments and 100% of VAT on maintenance.
Reduced Administration
All of the administration of the vehicle is handled by the leasing company, saving you precious time
What else do you need to consider before leasing a car through your business?
No finance agreement should be entered into lightly so do consider the following before you agree to lease.
Budget for the future
It’s important to be certain that you can meet the payments you’ve agreed to for the duration of the contract. You might have your eye on the latest top of the range 4x4 but is this realistic ...... don’t get carried away!
Early Termination Costs
If you need to terminate your car leasing contract early, you will be asked to pay a fee, typically 50% of any outstanding rentals.
Mileage
Customers that exceed their agreed annual mileage will be charged with an excess mileage at 'pence per mile' rate set at the start of your contract. Don’t underestimate your mileage just to get a cheaper monthly cost - it won’t work out to be cost effective.
Fair Wear and Tear
Customers must return the vehicle in a well maintained condition. Any damage over and above “Fair Wear and Tear” will be subject to additional charges. Read more about Fair Wear and Tear in our blog
Insurance
Always factor in the cost of insurance. The leased vehicle must be insured with full comprehensive cover and for business lease agreements, the insurance certificate should be in the company name or a director's name.