Business Leasing
A complete guide to Business Car Leasing
What is Business Car Leasing?
Business car leasing, also known as business contract hire, is a flexible and cost-effective way for businesses to fund one or multiple vehicles without paying the full cost upfront. Whether you need a single car or an entire fleet, Sam Smith provides solutions for vehicle supply and management to suit your business needs.
Business contract hire is suitable for all types of businesses, including limited companies, sole traders, and partnerships. With this type of lease, you can tailor the agreement to a set term, choose options for maintenance, and enjoy predictable monthly payments. At the end of the lease, simply return the vehicle or upgrade to a newer model, making it easy to keep your fleet current.
Why Businesses Lease Instead of Buy:
Leasing provides businesses with access to new, reliable vehicles without the burden of ownership, depreciation, or long-term commitment. This is especially appealing for companies looking to regularly refresh their fleet and provide employees with modern, efficient vehicles.
Leasing is a great option for VAT-registered businesses, as they can usually reclaim 50% of the VAT on cars and up to 100% on commercial vehicles. For contracts with maintenance, 100% of the VAT on services is recoverable. With leasing, there’s no need to worry about the vehicle’s future value, as the leasing company manages disposal.
Advantages of Business Leasing
When considering business leasing, several key benefits make it an appealing option:
- Minimal Upfront Costs: Leasing requires less capital upfront, freeing up funds for other business expenses.
- Predictable Monthly Payments: Enjoy accurate monthly accounting with fixed payments for the contract duration.
- Fixed Interest Rates: Rates remain constant throughout the lease, protecting against market fluctuations.
- Reduced Administration: Leasing providers handle much of the paperwork, making fleet management easier.
- Ongoing Support: Jacksons Leasing offers expert guidance and support throughout the lease term.
- Included Road Fund Licence: Road tax is provided for the entire lease period, so there’s no need to renew it separately.
- Maintenance Options: Choose an optional maintenance package to cover routine services and repairs.
- Breakdown Cover: Optional breakdown rescue cover for added peace of mind.
While business contract hire offers many benefits, there are a few potential drawbacks to consider:
Disadvantages of Business Leasing:
- Costly Early Termination: Ending the lease early can incur significant fees.
- Excess Mileage Charges: If you exceed the mileage agreed in your contract, you’ll be charged for each additional mile.
- Vehicle Condition Requirements: The vehicle must be returned in good condition, as any damage beyond what’s specified in the 'Fair Wear and Tear Guide' may result in additional charges.
- Insurance Requirements: Fully comprehensive insurance is required for leased vehicles.
- No Ownership Option: You won’t own the vehicle, as there isn’t always an option to purchase it at the end of the lease.
These factors are important to weigh when deciding if business leasing is the right choice for your company.