Whether you're a small start-up or a large corporation, business car leasing is a fantastic way to save money on a brand new set of wheels due to the benefits offered, from lower upfront costs to tax advantages and more.
That's true compared to other finance options like PCP, but also in comparison to personal car leasing as well.
Let's go through all the benefits.
What is a Business Car Lease?
Business car leasing (Business Contract Hire) gets its name for a reason – it basically works like a long-term vehicle rental for businesses.
Similar to personal car leasing (Personal Contract Hire), business car leasing is a type of car finance agreement. The key difference being that the lease is set up in your company’s name rather than your own.
Beyond that, the process is practically the same. You simply choose a brand new car, tailor the lease agreement to your preferred mileage, initial rental and contract length, then submit your enquiry, take delivery of the lease vehicle and start the monthly payments.
Included With Business Car Leasing
Some quick wins . . .
✔️ Breakdown cover: So you're not left stranded by the roadside in case of any unexpected mechanical faults
✔️ Full manufacturer’s warranty: So you don't have to pay for the part(s) that caused it
✔️ Road tax: So you don't have to waste time applying for it every year
Flexible Lease Terms
Need a short or a long-term lease? Then you can take out a lease agreement for just 12 months, or for as long as 4 years.
Or how about high mileage? Our business car leasing deals offer you up to 35k miles per year – and if you do end up driving more, you just pay for the excess mileage at the end of your contract (usually charged at a rate of 7 to 30p per mile).
And depending on the leasing company, you'll also usually have the freedom to extend your lease or terminate your lease early. So if your circumstances or business needs change, just check your contract or give your leasing provider a ring.
Cheaper vs PCP
Mainly because you're only paying for the car’s depreciation over the course of a lease, rather than paying for the full value of the car (like in PCP).
PCP payments also tend to be higher because they cover part of the car’s value in case you want to purchase it at the end of the agreement (known as the balloon payment).
All reasons why we include a 'savings vs PCP' figure on the lease deals on our site, just to make it clear what you're saving.
(For a full explanation on how we calculate our leasing vs PCP rates, please visit: https://www.leaseloco.com/pcp-savings)
Lower Upfront Costs Than Buying
After all, maybe you can’t afford to put down £10,000+ to buy a new car outright.
And because of how fast new cars drop in value, that's probably not a good idea anyway.
On our business car lease deals, you don't have to put down a large deposit if you don't want to. You can even choose no deposit (1 month), meaning you'll only be putting down £200 upfront in the case of certain vehicles.
Improved Cash Flow
Business leasing is considered a form of credit, meaning that your company’s valuable cash is then freed up elsewhere for expenses in other areas.
On the other hand, buying a new car upfront requires a large sum of money/capital, meaning you'll have less available cash compared to if you lease.
No Depreciation Worries
Let's say you were to buy a new car instead of leasing one.
Chances are it would lose over half its value in the first 3 years, and a large chunk of that would be from you just driving off the forecourt. Then when you finally come to sell it, it’s now worth a lot less than what you bought it for. D'oh!
Not so with leasing.
Here, your monthly payments largely cover how much the vehicle is expected to depreciate in value, and because you're not selling the car at the end of the agreement, you don't have to worry about what it'll eventually be worth. That's the leasing company's problem to figure out.
No Big Balloon Payment at the End
Speaking of the end of your contract, you also don't have to decide whether you want to make that optional big balloon payment to own the car, like what you get in PCP contracts. And not everyone who takes out a PCP deal ends up paying the balloon payment anyway.
No. At the end of your lease, you return the car and take out a new one, or simply walk away.
Access to a Brand New Car
Yep, every single business lease car on our site is brand spanking new.
And brand new means shiny new paintwork and a vehicle that's fully up-to-date – which is only going to reflect positively on your business.
Less chance of a breakdown, less loss of time and £££.
And remember, your business lease car is covered by a full manufacturer’s warranty just in case!
VAT Tax Benefits
The main advantage that business leasing has over personal leasing – which doesn't give you any VAT or tax benefits.
If it's a VAT-registered business and you use the car for business use only, you can claim back a whopping 100% of the VAT on your monthly business car lease payments.
Or if you use the car for both personal AND business use (which is a bit of a perk in itself), then you can still reclaim 50% of the VAT on your monthly payments.
Providing a Staff Perk
Happy workers, happy business, right?
Offering a company car is a great way to enhance your employee benefits package. Business leasing makes it simple to provide this perk, though employees will need to pay Benefit in Kind (BiK) tax on the car.
The tax amount is determined by HMRC and depends on factors like the car’s model and emissions. Choosing a low or zero-emissions vehicle can significantly reduce the tax rate, making it an attractive and cost-effective option for eligible staff.
Take Out a Business Lease with LeaseLoco
Sound good?
Then head over to our business car leasing deals, pick your perfect business lease deal and get started.
We’ve got your business covered.
FAQs
Is it worth leasing a car through my business?
Business car leasing is a smart choice if you want to drive a new car every few years while keeping your cash flow in check. Plus, you can reduce costs by reclaiming up to 100% of the VAT and benefiting from low company car tax rates.
Why is business car leasing cheaper?
The main reason why business car leasing is cheaper than personal leasing is due to the potential VAT and tax savings. With a business lease, your business can claim back 100% of the VAT if the vehicle is used solely for business use, or 50% of the VAT if the vehicle is used for both business and personal use – which is still a significant saving.
Can I use a business leased car for personal use?
You can use a business lease car for both business and personal use, but not for personal use alone. Although when it comes to tax and VAT, you'll typically only be able to reclaim 50% of the VAT if you use the car for both business and personal use.
Can my business lease a car?
To lease a car, your business will need to be registered either as a limited or a public limited company, and you’ll have to provide certain proofs too, including ID, bank statements and a director's guarantee. You'll also need to pass a basic credit check.