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Should you be leasing your next company car?
04 January 2016
When it comes to funding a company car or fleet for your business, then, presumably you’d want to make sure you’re getting the best deal for your company...right?
So should you lease your next company car? We've put together a simple guide to business car leasing, to help you figure out the difference between lease agreements, which car will suit you, and how business car leasing can benefit your company.
What are the advantages?
- Accurate monthly budgeting, which will improve your cash flow and you’ll know exactly how much you’re spending each month
- Fixed interest rates
- Optional maintenance packages, including breakdown cover, a replacement vehicle, and GAP insurance
- If you lease a car, you can claim back 50% of the VAT. With a commercial vehicle such as a van, you can claim back the full amount
- If you lease a business car, then you’ll have the option of being able to change or upgrade your cars every couple of years. So you’ll never have to worry about depreciation, and you can keep your business image looking constantly fresh and modern.
Which agreement should I go for?
There are many different types of leasing that you can opt for. Some of them benefit personal leasing, while others are more beneficial for companies. Make sure you know which option you want to go for and find the one that will benefit your company the most.
Contract Hire
Is the most popular choice of lease for VAT registered and non-VAT registered companies. Especially if they want control of costs with maintenance and relief vehicles included. Payment also covers the risks of depreciation and disposal.
Finance Lease
This is the perfect option for VAT registered companies who can either pay the entire vehicle cost over a set period (plus interest) or pay lower monthly costs with a final payment, which is based on the anticipated resale value of the car. You can even use a helpful car finance calculator to see how much you could borrow to help fund your business finance cars.
Contract Purchase
Companies with high-value cars will have the option to eventually purchase the car, without the risk of depreciation. Either by keeping car at the end of the lease or by giving the car back to the contractor.
Lease Purchase
Non-VAT registered companies or individuals can eventually own the car with this option. You can own the car when all payments have been made, and part of the capital cost of the car can be deferred into a balloon payment at the end of the contract.
Which company car should I choose?
Whichever car you decide to go for, you’ll need to choose something that best suits your company’s lifestyle. If you’ll be travelling a lot of miles then you’ll need something with good mpg, or if you’re going to a lot of business meetings, then maybe you’ll want something luxurious to boost your business image.
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