Why Lease Rather Than Buy?
For business owners, leasing has long been more advantageous than buying because most car leasing expenses are tax deductible, there’s minimal financial outlay involved, road taxes are usually included, and leasing rates are usually much lower than repayments.
There are, however, a few drawbacks to car leasing contracts including the capped mileage limit most car leasing agencies apply to their leasing contracts and the fact that the business won’t have accumulated an asset by the end of the leasing contract.
At the end of the day, leasing is a better option for business owners, though they’re advised to confer with their accountant to ensure leasing will prove more advantageous in the long run than buying a business car outright.
Which Car to Lease?
Business owners shouldn’t get carried away when leasing a car just because they’re presented with the opportunity to get about in a car they couldn’t ordinarily afford but rather select a vehicle that’s suited to their business needs, though having said that, in business circles it’s important to put one’s best foot forward and getting about in a nice car conveys the impression of professionalism and prosperity.
However, efficiency should be a high priority, and not only because of the savings afforded to businesses with regard to fuel consumption, but also because higher emission vehicles are hit with rising taxes as was announced in the last budget.
“By choosing more efficient vehicles, the tax savings and environmental benefits to the business will be considerable,” says Matt Dyer, LeasePlan’s commercial director.
Important Car Leasing Contract Features
Leasing a business car is actually very straightforward but it isn’t something to should rush into because there’s quite a lot to take into consideration.
Once you’ve decided upon a make and model that’s most suitable for your business needs you can start sourcing car leasing agencies to shortlist by comparing the deals they have to offer.
The length of time you wish to lease a car is an important consideration because you’ll be entering into a binding contract and you need to lease a car for the length of time you deem suitable for your business needs.
Most car leasing agencies offer contracts of 12, 24, 36, or 48 months, so make sure you can lease a car for the length of time that best fits in with your business plans.
Mileage caps are another important contractual feature that you’ll need to take into consideration when sourcing a suitable leasing contract.
Most agencies offer similar mileage caps, though if you feel as though you’ll exceed the mileage cap – when you exceed the mileage cap you’ll pay a fixed fee per mile – you need to source a leasing agency that provides higher mileage contracts; however, you also need to bear in mind that higher mileage contracts equate to higher monthly payments.
Additionally, discuss the possibility of extending the mileage cap if needed as some leasing agencies will allow you to increase the mileage if it appears as though you’ll need to exceed it, though be sure to discuss this prior, not after, entering into a business car leasing contract.
Vehicle options, for instance Satnav and digital air conditioning, are something else to look into further and you should also discuss your branding options if you plan on emblazoning your leased car with a car body wrap – car wraps are an excellent marketing method that garners plenty of exposure – to increase awareness of your business brand when you get about town.
Gap insurance is another important contractual consideration to check before signing on the dotted line, as are acquisition and disposition fees, and don’t forget to enquire about purchase options and the fees applied in case you decide to buy.
Car leasing is, generally speaking, a much better option than buying a car for business purposes but you need to know what to look for in a business car leasing contract.