Ah, you’re here so it seems you do. That could be good news if you’re in the market to offer your employees more benefits, more specifically, it could be good news if you’re looking at building up a fleet of company cars.
Why? Let us explain
Stopping reading at a headline means you’re likely to be someone who takes the first piece of information you see and forms their opinions based on it. It could be misleading, out of context, or just plain wrong. But people who don’t read on will never know.
The ‘headline’ when it comes to leasing versus buying company cars is often the ticket price. People might see this and make a decision on the quality or value of the deal by comparing like-for-like.
However, it’s not that straightforward so we want to help our customers make an informed decision by asking them to read beyond the headline information.
Before we start, we have a favour to ask. The next piece of information you see might seem a little ‘dry’. Bear with us, and remember to read on!
Whole life cost calculation
We know. It’s one of those awful buzzword phrases that just seems to imply you need to be certified or chartered to understand it. But here it is made simple:
This calculation is about looking at all the costs associated with taking on a fleet of cars, something which it’s really important to do because you can’t make a business decision with only a small piece of the puzzle. Understanding it will mean you can more accurately compare the costs of different makes and models of car and choose the one best suited to your business and budget. You can also compare the total (whole life) rental and purchase costs, again to see which works best for your business.
Here are the elements that make up this ‘whole life cost’:
- Rental cost (yes, the headline, which we’re pretty sure you’ve considered)
- Allowable amount of VAT (allowable because you can only claim back a proportion of the VAT on a company car)
- National Insurance (NI) contribution (needs considering as you will pay an extra element of NI based on the value of the benefit you give to your employees)
- Fuel costs (if you’re paying for fuel, you need to add these in too)
- Corporation tax implication (the government is set to reduce this
- The cost of charging (if your fleet is electric) or the cost of fuel (if it is not)
If you are comparing lease costs with purchase costs it’s also worth bearing in mind depreciation and the fact that cars lose around £1,000 in value the minute you drive them off the forecourt.
The pros and cons of leasing
It’s certainly true that leasing a fleet of cars is significantly cheaper than buying them. However doing so does mean you don’t own them as assets so can’t sell them on and may also need to stick to an agreed mileage limit.
However, leasing means you only pay for the use of the car, not for the full value of it (whereby it will depreciate in value from day one).
Finally, maintenance costs can be included in the monthly rental fee which makes it far easier to budget and forecast the costs of your fleet.
So, the choice is yours. But here’s one thing you do know – it’s always worth reading beyond the headline.
Take a look at our current offers here.