More and more businesses are turning to automotive leasing to finance their next business vehicle – be it a sole trader looking for a new car or a limited company that is growing a business fleet. Unlike an outright purchase, contract hiring offers a multitude of benefits that help businesses to save on financial and operational costs:
- No need to have great capital
Perhaps one of the biggest advantages of leasing, you only need to pay a smaller monthly rental fee that starts a few days after the delivery of the vehicle.
- Easier budgeting
With a fixed monthly rental fee, leasing makes budgeting a whole lot easier – as your business is only paying for the depreciation of the vehicle over the length of your lease contract. This frees up more cash for your business, which can be spent in more important areas .
- Variable contract duration and mileage terms
Flexible leasing terms give you the freedom to choose a contract that best suits the needs and requirements of your business. For a significant reduction in administration, vehicle leasing also offers flexible invoice arrangements that can be beneficial for businesses.
- Healthier cash flow management
Contract hire eliminates depreciating assets from your company’s balance sheet and the related hazards of owning a vehicle, such as value reduction and disposal.
- Valuable additional services
In leasing, you can also opt to match your vehicle or fleet with added services such as maintenance – you can spread the cost over an extended term for extra peace of mind.
- VAT claim back
For businesses that are VAT registered, they can also claim back 50% of the VAT on the contract hire payments and 100% of the VAT on maintenance services.
- Less hassles and concerns
No need to stress over the administration of the leased vehicle; the leasing company is responsible for handling all the necessary requirements.
Points to Consider before Proceeding with Business Leasing
Other than the benefits, it’s also vital to understand the following key points before you ensue business leasing:
Early Termination Costs
You will need to pay an early termination fee (which is usually 50% of any outstanding rental costs) if you suddenly change your mind and want to terminate your business contract.
If you exceed the agreed annual mileage, you are required to pay an excess mileage at the ‘pence per mile’ rate set at the start of the contract.
Fair Wear and Tear Guide
Any damage stated in the Fair Wear and Tear Guide will be subject to further charges – so customers must return the vehicle in a well-maintained state.
Full Comprehensive Insurance
The insurance certificate should be under the company name or a director’s name. If an employee is required to use the vehicle, a letter can be requested confirming that they are authorised to drive the vehicle.
For more information about the benefits and key considerations of automotive business leasing, contact ALD Automotive on 03700 011 181 and a member of our friendly team will be happy to assist you!