When it comes to acquiring vehicles for your business, leasing offers a host of advantages that can optimise your budget and streamline your operations.
With business contract hire, you can enjoy numerous benefits that go beyond traditional vehicle ownership. Let's explore the top reasons why leasing may be the perfect solution for your business needs.
More Value for Your Money
One of the most compelling advantages of leasing a brand-new vehicle is that you get more bang for your buck. Instead of purchasing the entire vehicle, you only pay for the depreciation that occurs during the lease term. This means you can enjoy driving a new car without having to shoulder the full cost of ownership. At the end of the lease, you simply return the vehicle to the finance company and choose your next brand-new vehicle to lease.
Tax Breaks
If your business is VAT registered, leasing can offer valuable tax benefits. You can claim back at least 50% of your initial and monthly costs, while vans can be claimed at a full 100%. This concession assumes that the car will be used equally for personal and business purposes. However, if you can prove that the vehicle is solely used for business and left on company premises overnight and on weekends, you may be eligible to claim back 100% of the costs. These tax advantages can significantly reduce your overall expenses.
Eco-Friendly Cars
Leasing allows you to access more cost-effective options, making it easier to afford vehicles with the latest fuel economy technology. By choosing an energy-efficient or eco-friendly vehicle, your business can save a substantial amount on fuel costs compared to older, less efficient cars. Moreover, opting for an economical car with lower CO2 emissions can lead to further tax advantages for your business.
Free Up Capital
Leasing vehicles provides a financial advantage known as "off balance sheet financing." This means that leased vehicles are not recorded as assets or liabilities on your company's balance sheet, unlike vehicles purchased with a loan. By keeping vehicles off the balance sheet, you reduce your company's debt burden. This, in turn, preserves your available credit, allowing you to borrow more for future growth and expansion plans.
Reliability
New vehicles offer increased reliability compared to older models. Keeping your business operating smoothly requires dependable transportation. Leasing new vehicles provides the peace of mind that comes with reliable, well-maintained cars, minimising the risk of breakdowns and maximising your business's efficiency.
No Depreciation Worries
Unlike vehicle ownership, leasing eliminates concerns about vehicle depreciation. Since you don't own the vehicle, you don't have to bear the burden of its decreasing value over time. Purchasing a new car immediately results in depreciation, with the vehicle's value potentially decreasing by up to 40% within the first year. By leasing, you can avoid this depreciation and preserve capital within your business.
Improved Fuel Economy
Leasing new vehicles allows you to benefit from the latest advancements in fuel economy technology. By driving more fuel-efficient cars, you can effectively lower your business's fuel expenses. This not only reduces costs but also contributes to a greener and more sustainable approach to transportation.
Road Tax and Manufacturer's Guarantee Included
Leasing simplifies your financial management by including the Vehicle Excise Duty (road tax) in the lease agreement. This means that you won't have to worry about paying this tax separately, as it is already accounted for in your monthly payments. Additionally, the manufacturer's guarantee typically covers the entire lease term, offering added peace of mind for maintenance and repairs.
Less Administration
By opting for leasing, you delegate the administrative tasks related to vehicle purchasing, taxation, and selling to the finance and leasing company. This frees up your time and allows you to focus on core business activities, streamlining your operations and improving overall efficiency.
Improved Technology and Safety Features
Leasing new vehicles means gaining access to the latest technology and safety features. From advanced safety systems to Bluetooth connectivity for hands-free calls, newer vehicles offer enhanced features that contribute to driver comfort, productivity, and overall road safety. Furthermore, many vans now come equipped with features that facilitate mobile office setups, catering to businesses that require efficient on-the-go operations.
Tailored Agreement
Leasing companies can create customised business vehicle lease agreements that align with your budget and specific requirements. From choosing the leasing period, which can range from 24 to 60 months, to tailoring the agreement to your business's unique needs, leasing provides flexibility and adaptability to accommodate your financial goals.
Get a New Vehicle Every Few Years
At the end of your lease agreement, you have the opportunity to hand back the current vehicle and upgrade to a brand-new one. This arrangement allows your business to consistently benefit from the latest vehicle models, incorporating the newest technologies and ensuring that your fleet remains modern and efficient.
In conclusion, business car leasing provides numerous advantages that can optimise your company's budget, enhance your professional image, and streamline your operations. From significant cost savings to tax benefits, improved reliability, and the opportunity to stay up to date with the latest technologies, leasing offers a compelling solution for businesses of all sizes. Consider exploring car leasing options and leverage the benefits it can bring to your business.
By Sarah Portet
Compass Vehicle Services