New businesses can get a business car lease deal. As long as a finance provider can see proof that shows the company can afford the monthly rentals, and your new business has enough trading history, you shouldn’t have an issue leasing.
Business leasing is a great way for start-up companies to cut costs by not having to invest in a depreciating asset. For fixed monthly payments, you can get a leased vehicle which is brand-new and does what you need it to, without having to worry about overspending company cash.
Although new businesses tend not to have much in the way of financial history, there are a few options available which mean they can still lease one or more vehicles. Read on to find out what these are and the documentation you’ll need for each.
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As part of every vehicle lease contract you will be required to undergo a credit check from the finance provider funding it. Because this involves looking at the bank account and director’s information, it may come as a concern for new businesses who don’t have much to show in terms of revenue and expenditure.
However, if your company is less than one year old, you will likely need to support any application with additional details.
Here are the information all businesses must provide to finance companies before they lease.
It’s likely that a finance provider will ask for some additional information if you’re a start-up company that has been established for less than 2 years.
This can include:
Remember: A higher initial rental may be needed if your company isn't well-established.
Without the above information, it’s unlikely that you’ll be approved for the finance needed to lease. If you do, it will likely be at a higher interest rate.
Vehicle leasing through a business contract hire (BCH) agreement is available for a range of companies, including:
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The reason why business lease agreements are the most sought-after option for new enterprises is because of a number of reasons, which include:
If you’re the director or an employee of a new business that has been rejected finance for a lease, it’s worth looking at personal leasing as an alternative to get a company motor. Here’s how.
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Unlike when you apply for a business lease agreement and a finance provider looks at your company’s financial history, a personal deal will only consider the details of the individual applying for a contract.
So, as long as you’re 18-years-old, have a full UK driving licence and a good to excellent credit score, you shouldn’t have an issue being approved.
This is useful if you’re a sole trader running your own business and need an affordable vehicle for a couple of years or so to use for work while finances grow. You won’t be restricted to just private journeys for a personal lease too, so you’ll have greater flexibility than if you were to have a business agreement.
Remember: A leasing company will ask you for an annual mileage for each year you spend with the car, the total of which will be checked when the car is collected at the end. If you intend to use vehicle for personal and business use, be sure to calculate your annual mileage before signing any contract to avoid excess mileage charges.
It’s also worth noting that monthly payments will be slightly more expensive, due to them including VAT.
To find out what documents you need for a personal agreement, check out our other guide on this.
Looking for a personal lease agreement? Check out our guide on which documents you need for a personal car lease.
Although short-term vehicle leasing isn’t offered by every provider, it’s becoming increasingly popular as an alternative to standard car rental, which often charges higher daily rates.
On the contrary, a short-term lease intends to be a solution to this problem, offering the same fixed monthly payments as a standard two to three-year agreement, but for as little as three, six, nine or 12 months. At the end of the deal, you simply hand the keys back to the finance provider and decide whether you want to take out another contract on a new car or walk away.
So how is this appropriate for new businesses? Well, short-term agreements that are no longer than three months don’t require a credit check, meaning a lack of financial history isn’t an issue when you’re applying. What’s more is that it’s usually available for both personal and business customers, and can even include insurance cover, maintenance and breakdown recovery.
Remember: Short-term leasing shouldn’t be seen as a long-term solution for vehicle hire, as higher deposits and monthly rentals can mean it’s more expensive than regular agreements.
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