A set of wheels can be essential to getting your new business up and running, but to get a set of wheels, your business has to be . . . not new?
Or so you thought.
The prospects are actually much brighter, as business car leasing is open to more or less any business, no matter how long you've been trading. Yes, even if your credit score's a tad, shall we say, under par.
We tell all below to make your car leasing journey as smooth as it can be.
Car Leasing: What is Business Contract Hire (BCH)?
Business car leasing, or business contract hire (BCH), is essentially a long-term rental agreement. It offers the lessee (that's you) the freedom to drive a brand new car for a set time without the financial burden of ownership. Then at the end of the lease, you simply return the vehicle.
Compared to PCP, business leasing is cheaper on average and doesn't give you the hassle of worrying about selling the car on or paying a hefty balloon payment at the end (which many PCP users don't choose to pay, anyway).
Business leasing differs from personal leasing in that it's your business details which go on the lease agreement, rather than your own personal details. And of course, as well as using the car for personal use, you can now also use it as part of your job e.g. driving to meetings or between offices, or long road trips to attend conventions and conferences.
Read more for a more detailed explanation of business car leasing
Can My New Business Lease a Car?
You're in luck, as most types of business can apply to lease a car, no matter how long you've been trading.
A minimum trading history of 2 years is generally preferred, though that figure's not set in stone. What's more important that you're able to afford the monthly payments, so if you can, then that's more than a good start.
The main types of organisations eligible for business car leasing include:
- Limited Companies (Ltd.)
- Public Limited Company (PLC)
- Self-employed/sole trader (find out more about self-employed car leasing)
- Partnership
- Limited Liability Partnership
- VAT-registered and non-VAT-registered companies
- Charity
Not one of the above? Then reach out to our leasing partners when you enquire and they will be able to tell you if you are eligible.
Taxi or uber companies won't be able to secure a lease through us, however. The constant driving would mean more wear and tear etc., resulting in greater vehicle depreciation (loss in value), meaning the leasing company would likely be out of pocket down the line. However, specialist leasing companies do still exist for those.
What Documents Do I Need for a Business Lease?
When you enquire on your chosen vehicle, our leasing partners will generally ask you for the following information:
Company details: Name, address, company registration number (if applicable), email, contact number
Director's information: Name, date of birth, address (possible)
Business bank details: Bank name, sort code and account number
To qualify for a business car lease deal, you'll also need to be in possession of a full, valid driving license.
Additional Information That Might Be Required
The following may also be required if you are a new business, though there's no guarantee that you will be asked for them:
- 3 months of bank statements
- Up-to-date financial statements or management accounts
- Director's guarantee (Limited Companies only)
What If I Don't Have Any of Those Documents?
We get it, you're a new business. You might not have any of that to hand.
In which case, the finance company may ask you for a realistic cash flow forecast instead.
Can My Business Lease a Car With Bad Credit?
Leasing companies want to make sure you're likely to pay what you say you'll pay, which is why the credit check forms such an important part of the eligibility check, and not just for business lease deals.
Funders obviously prefer you to have a 'fair' to 'good' credit score, but it's still very possible to get a business car lease with bad credit.
Apart from providing extra info like a director's guarantee, you could try one or more of the steps below.
How Can I Improve My Chances If I Have a New Business With Bad Credit?
Choose a shorter lease: Instead of going for a 2 or 3-year contract, consider a 1-year business lease. That way, you are essentially borrowing less of the money, meaning that the leasing company will consider you as less of a risk
Put down a higher initial rental: Again you are paying for more of the lease upfront and borrowing less of the money on credit
Put down a guarantor: A guarantor is someone (usually a family member) who will 'guarantee' to step in in the event that you default on your payments. Of course, make sure to get their permission first
How Long Does the Credit Check Take?
Most funders should process your credit application within 2 working days at most, though during busy periods this could occasionally stretch to 5 working days.
How Long Does It Take to Build Enough Credit for a New Business Lease?
It's a big question, as this can differ depending on company circumstances, but in most cases, building up a healthy credit file typically takes 2 to 3 years.
And remember, as you carry on making the payments on your current business car leasing deal, you're gradually improving your credit score for the next time you take out a car lease (or take out anything else credit-related for that matter).
Do I Need a Big Deposit?
Not at all.
There's plenty of business car lease deals available with a low or no deposit.
A smaller deposit is ideal if you don't have a large sum of money available to put down upfront, and its not as if your monthly payments will increase as a result. The overall amount that you pay stays the same over the course of the lease, whether you put down a large or a small deposit.
On the flip side of the coin, a bigger deposit could make your monthly payments more manageable. All a matter of your own circumstances and needs.
Check out our no deposit business car lease deals
Benefits of your Business Lease
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Fixed monthly lease payments
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Cheaper vs PCP (find out how we calculate this)
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Brand new car that would cost thousands of £££s to buy upfront
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Payments will be "off balance sheet"
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Road tax and the full manufacturer's warranty included
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Tax advantages and savings, including on corporation tax
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Ability to reclaim VAT (100% if you use the car for business use only, or 50% if you use the car for both business and personal use)
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No hassle of selling the car on
Get That New Car Feeling More Often
Yep, every single vehicle displayed in the business car lease deals on our site is brand spanking new, meaning you and your employees will be driving premium vehicles.
Summary: Lease with LeaseLoco
Yes, business car leasing does have some hoops to jump through, but less than you might think, so it’s still accessible even if your business is fairly new. Even having a bad credit score won’t automatically disqualify you.
Business car leasing is still the best way to get behind the wheel of some of the newest makes and models and the most tech savvy electric vehicles.
Interested? Head straight to our business car lease deals and get started.
How Our Car Leasing Process Works
1) Pick the vehicle that takes your fancy
2) Adjust the lease terms to suit your preferred mileage, initial rental and contract length
3) Contact our leasing partners by clicking the Call button or 'Get my quote'
4) Finalise lease and sign your leasing agreement
5) Await delivery of your brand new car
6) Drive and enjoy!
FAQs about Business Car Leasing Eligibility
What is a business car lease?
A business car lease (Business Contract Hire) is essentially a long-term rental arrangement. This agreement enables businesses to use a car or fleet for a predetermined period, usually between 2 to 4 years, in exchange for fixed monthly payments with an optional initial rental payment.
Unlike buying a vehicle outright, leasing doesn't give you the burden of the full purchase cost and the depreciation of the asset. Instead, once the lease term ends, the vehicle is simply returned to the leasing company.
Can a new business get a car lease?
Car leasing for new businesses is very possible, as there's actually no strict rule about having a certain amount of trading history. But to give yourself the best chance, it's generally preferred that your business has a good credit score and that you can demonstrate a stable income through business bank statements, as well as providing company details such as your registration number. If you're a new business, you may also need to provide additional documents, such as a director's guarantee.
Is it better to lease a car through business?
This will depend on your circumstances. Business leasing and personal leasing (Personal Contract Hire) are both rather similar. That said, business leasing can be cheaper than personal leasing as you can claim back VAT on the monthly payments which can be a cost-effective way to lease a car.