6 Benefits Of Leasing A Car Through Business
Business leasing is becoming increasingly popular with SMEs and big corporations alike as a way of improving cash flow, keeping staff happy and ensuring day-to-day operations run smoothly.
But that’s not all. Discover six great benefits of leasing a car through a business in this guide.
1. 100% VAT can be reclaimed
Perhaps the biggest benefit of leasing a car through business is that if your company is VAT registered you can reclaim up to 100% of the VAT on the monthly payments. This is why prices listed on Moneyshake for business leasing are cheaper than personal lease deals because VAT is already deducted.
However, the amount of VAT you can reclaim depends on how the vehicle is used. To reclaim the full 100% VAT, the vehicle will have to be used for solely business purposes – if the vehicle is used for any private journeys, you’ll only be able to reclaim 50%.
Here are two common examples where half or all of the VAT could be reclaimed:
- For a vehicle such as a pool car which is kept at the company’s premises and employees share for solely business purposes, you’ll be able to reclaim 100% VAT.
- For a company car that does some personal miles, you’ll be able to reclaim 50% VAT. These personal miles will also need to be logged and include commuting to and from a workplace.
For more information on the differences between business and personal leasing, check out our other guide comparing business and personal leasing.
2. Manage cash flow
If you run a business, you understand the importance of cash flow and that there’s nothing worse than having unpredictable finances, especially if you’re trying to attract investors. Business leasing is one more way to bring order to your company finances, with fixed monthly payments throughout the agreement, ensuring there’s no uncertainty when it comes to vehicle spend.
All lease cars are brand-new too, meaning you’re protected by warranty throughout your contract. Even the most basic warranty is three years/60,000 miles, so you can be safe in the knowledge that unexpected repairs for electrical/mechanical problems won’t whack company finances.
3. No depreciation – save time and money
With business leasing, you don’t have to fork out thousands of pounds upfront for a car, which then loses its value the minute it’s driven.
Instead, you’ll pay monthly for the depreciation of the vehicle over the time period you have it, typically 2-3 years, and when you hand the keys back, you’ll have the choice of taking out another car on a separate agreement or simply walking away.
Not only does this save you money, you’ll also save time by not having to advertise the car (which would also cost you money e.g. AutoTrader charges £36.95 for their basic listing*). For example, it’s not uncommon to get let down by prospective buyers who could cancel at the last minute to view the vehicle, or take weeks before committing to a purchase.
This time could be better spent by focusing on the more important things – growing your business!
*Prices accurate as of 04/08/2020.
4. Brand-new vehicles
As well as ensuring employees look professional when out on the road meeting clients and prospective customers, brand-new vehicles are bound to keep your staff happy and raise morale.
Offering professional and desirable company cars can also work as a great incentive for employees. This can help to encourage existing staff to work harder as well as help draw in new hires.
It’s also important to note, that while employees do have to contribute to BIK (Benefit in Kind) tax for a company car, it’s still likely to be a lot less than what they would be otherwise paying for their own vehicle. You can also choose a car which has low g/km of CO2 emissions, which is what the rates are heavily based on, to make BIK tax even cheaper.
For more information on company cars and BIK tax, check out our complete guide on company car tax.
Affordable company cars
*Prices accurate as of 04/08/2020.
5. VAT-free maintenance available
In addition to being able to reclaim VAT on the vehicle lease fee, with business leasing you’re also able to claim up to 100% of the VAT on a maintenance package.
A maintenance package is an optional extra that helps with the additional costs of vehicle maintenance and can help put your mind at ease when it comes to common wear and tear issues. This additional fee can be paid separately or added to your monthly payments, so is very manageable.
Covering servicing, MOTs, oil checks and breakdown recovery, a maintenance package is a great way to ensure your vehicle is in tip-top shape. They also help make sure that you aren’t hit with end-of-lease damage charges on areas you didn’t think of.
However, as lease cars are covered by the BVRLA Fair Wear and Tear guidelines, you should be aware of what standard your vehicle needs to be in when it comes to handing back the keys.
Having a maintenance package isn’t the equivalent to a ‘get out of jail free car’ and it’s worth bearing in mind that a maintenance package doesn’t cover everything. For example, damage caused by driver error or accident isn’t covered and neither is excessive paint and body damage.
6. Special offers all year round
Another great benefit is that there is a huge market out there for business leasing. Multiple providers exist that have access to various funders who are all vying for your business, which keeps prices competitive all year round. As such there are always discounted special offers to be had on new cars.
Thankfully, specialist comparison websites, including Moneyshake, put all of these offers in one place for you to easily compare prices. With a wealth of deals available, you no longer have to trawl the internet for the best deal for your company – we bring the offers directly to you!
How do I know if I qualify for business car leasing?
When you go to lease a new car through your business, the process is more or less the same as it would be if you were leasing the car for yourself. The only difference is in the details you’ll provide to the leasing provider before your new car is delivered – these will be business-specific and not relating to you as an individual.
The key thing to remember with a business lease deal is that you’ll be required to undergo a credit check from the finance provider funding your agreement. This will involve looking at the bank account of your business and director’s information.
If you work for a company that’s less than one year old, you’ll likely need to support any application with additional details. Generally speaking, however, the following information will be sufficient enough:
- Business details – name, address, company registration number and yearly revenue.
- Director’s information – full name, date of birth and marital status.
- Company bank details – name of the bank, account number and sort code.
Ready to find your ideal company car? Compare prices now on our latest business lease deals for great offers.