Car leasing is the most cost-efficient way to get behind the wheel of a brand new car, whether it's for personal or business purposes.
Personal car leasing (Personal Contract Hire) and business car leasing (Business Contract Hire) are fairly similar overall, but with a few differences – the main one being the price, as there's some nice tax benefits to be had with business car leasing which can make it cheaper than personal leasing.
Find out which one's right for you.
Eligibility
For both, you've got to be at least 18 and in possession of a full driving licence.
For personal leasing, you've just got to be . . . a person. And for business leasing, you've got to be a business that's one of the following:
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Limited Company (Ltd.)
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Public Limited Company (PLC)
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Self-employed/sole trader
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Partnership
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Limited Liability Partnership
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VAT-registered and non-VAT-registered company
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Charity
Still not sure whether you qualify?
Feel free to ask our leasing partners when you enquire on a vehicle, and they'll be able to confirm if you're eligible. Like they say . . . nothing ventured, nothing gained!
But you won't be able to take out a business lease if you're a taxi or uber driver. That's because (sorry!) you'd likely be doing tons and tons of miles which would rapidly lower the car's future value, likely leaving the leasing company out of pocket.
Find out more about business car leasing
What's the Difference Between Business and Personal Leasing?
How you can use the car: Nothing complicated here. A personal car lease is intended for personal use, whereas a business car lease is intended for business use.
But here's the really good bit . . . you can actually use a business lease for some personal use as well (more on that shortly).
The name on the lease: When you fill out a personal car lease agreement, it will be your own name on all the paperwork. But when you fill out a business car lease, you're leasing the car through your company, so it will be your company’s name.
The documents: You will provide your own personal documents (ID, proof of income, bank details etc.), whereas it'll be your equivalent company documents for a business lease. This would include business bank statements, your company registration number, company address and other specific company details which will be approved by the finance company.
Both options will require a quick and easy credit check, but for a business lease, it'll be your company's credit file that's checked.
Tax benefits: More on this below ↓
Tax Benefits Can Make a Business Lease Cheaper Than Personal
Basically, VAT!
If your company is VAT-registered, you'll be able to claim back a whopping 100% of the VAT if you use the car for business use only, or 50% of the VAT if you use the car for both business and personal use.
And guess how much VAT you can claim back on a personal car lease deal? Yep, a grand total of 0%. Zilch. Nada.
So great savings either way, but if you do use your business lease for some personal journeys, you may be subject to Benefit-in-Kind tax (also known as company car tax). This tax is based on the car’s list price, its CO₂ emissions (meaning it may be more if you drive a heavily-polluting vehicle), and the amount of personal use that you actually do.
Find out more about business car leasing tax benefits
How Will the Leasing Company Know I'm Not Using a Personal Lease Car for Business Use?
They won't, but if you're found to be zooming about in your personal lease car for business purposes, you may face penalty charges.
Bottom line: not worth the risk.
Should I Take Out a Business or Personal Lease?
Personal Leasing (PCH)
✅ Can be used for personal use
✅ Fixed monthly payments
✅ Road tax, manufacturer's warranty and breakdown cover included
✅ No Benefit-in-Kind (company car tax) costs
❌ Can't reclaim any VAT
❌ Can't be used for business use
Business Leasing (BCH)
✅ Can be used for business use
✅ Can be used for some personal use
✅ Can reclaim VAT (50% or 100% depending on use)
✅ Road tax, manufacturer's warranty and breakdown cover included
✅ Fixed monthly payments
❌ May pay company car tax (Benefit-in-Kind) if you use the car for personal use as well
Can I Take Out a Business Lease if I'm Self-Employed?
Yes. If you're self-employed or a sole trader, you're eligible for business lease deals. And the process is just as easy as it would be if you were any other business.
Of course, you'll still have to go through a credit check and provide some documents in order to prove your business and income.
Find out more about self-employed car leasing
Can I Change My Lease Contract From Personal to Business?
Be great if you could do this, but usually you can't 'swap' your personal car lease to a business car lease, or vice versa.
You can however transfer a business lease to another business, for example if you change job (this is known as 'novation'). Both businesses will usually need to meet certain criteria set by the funder. However, not all funders allow it.
Lease With LeaseLoco
Apart from the name on the contract, personal and business car leasing are fairly similar in essence. You still lease a vehicle in exchange for fixed monthly payments, put down an optional initial payment at the start, and then give back the vehicle at the end of the lease. What can make a business car lease cheaper though are the tax and VAT benefits.
And remember, you can still use a business lease car for some personal use, but not the other way around.
Ready to get started? Head over to our personal car lease deals or our business car lease deals.
FAQs About Personal Leasing vs Business Leasing
What is the difference between a business lease and a personal lease?
In the context of car leasing, a personal car lease (Personal Contract Hire) is fairly similar to a business car lease (Business Contract Hire), with the exception that the vehicle can only be used exclusively for personal use and can't be used for business use (whereas a business car lease can be used for both). And with a business car lease, it's your business details that go down on the lease rather than your own personal details.
Apart from that, both require a credit check and involve fixed monthly payments, with or without an optional initial rental.
Is it better to lease a car through business or personal?
To an extent, this depends on how you plan to use the vehicle, but in general, business lease deals can work out cheaper than personal lease deals. That's mainly because you'll be able to reclaim some or all of the VAT: 100% if you use the car for business purposes only, or 50% if you use the car for both business and personal use. Either way, that's a significant saving compared to personal leasing, where you can't claim back any VAT.
Can I use a business lease car for personal use?
You can use a business car lease for personal use as well as business use, but in doing so, you'll only be able to reclaim 50% of the VAT and not 100%. And note that even the tiniest little car journey for personal use will still be classed as personal use.