If you don’t have the capital to buy a new commercial vehicle for your business outright, then you may look into leasing. If you’re looking for a business vehicle, there are many reasons why leasing could work better for you than taking out a loan and buying a new car outright. Here are a few pointers for your consideration:
New vehicle vs. old vehicle
The most obvious advantage for leasing your business vehicle rather than owning it is that you’re more likely to be able to afford a brand new, reliable car! For most businesses, being able to spread out the investment is beneficial to cash flow rather than just putting down one big lump sum.
A new vehicle is also great for business reputability. People are less trusting of a sole trader who turns up in a rusty old van. So, if you are able to attend jobs in a high quality, brand new vehicle you’ll be making a good first impression.
Maintenance packages relieve worry
You’ll need to do some research into this but some lease companies offer maintenance packages as part of the monthly rental. So, if something does go wrong such as your windscreen cracking or the need for a new tire – you won’t have to pay for it. Ensure in detail and confirm what comes with your lease deal before you drive off the forecourt.
Low initial rental
Instead of a large initial rental, business lease cars can be obtained with a smaller amount of money up front. So if you require business urgently then you won’t have to find a large amount of funds for a new vehicle.
If the vehicle you use is solely for business purposes, then you can claim back 50% of the VAT. You can do this via your HM Revenue and Customs online account and submit a VAT return, the money will usually be returned after 10 days.
Chances are if you are a small business buying a commercial vehicle, it will be second hand but getting a leased van or car are usually brand new. This makes leasing less risky than choosing a vehicle you don’t know the history of accurately. You also enjoy the manufacturer warranties covering repairs, that usually come with leasing a brand new vehicle. There is also no concern around depreciation of the vehicle simply because you do not own it and you hand it back at the end of your agreed rental period.
Low monthly payments
As well as the tax deduction, the monthly rental costs towards your lease busine vehicle will be lower than those incurred if borrowing money from a bank. You’ll also discover that leasing doesn’t feel like ‘debt’ because you never actually own the vehicle and so again, this is a weight off your shoulders.