Business Car Leasing: The Comprehensive Guide

Business car leasing has become increasingly popular over the past 5-10 years. Business owners now recognise that leasing a car is often a more cost-effective option than buying one outright. If you are a new business thinking about taking up a contract and want to find out more about how it works, read our comprehensive guide below which tells you everything you need to know.

What is business car leasing?

Business car leasing works in a similar way to personal leasing. A credit check is performed, and if the business successfully passes, they are able to ‘rent’ the car for a fixed period in return for monthly payments. This is an ideal solution for businesses with salespeople who do a lot of travelling or those who need vehicles for business-related transportation on a frequent basis.

Who qualifies for a business car lease?

You qualify for business leasing if your business is a:

  • Limited Liability Partnership
  • PLC
  • Local Authority
  • Partnership
  • Limited Company
  • Charity
  • Embassy
  • Or you are self-employed

How to get a business car lease?

In order to successfully secure a business car lease, there are a few initial steps to go through which we explain in more detail below.

Step 1: Choose your ideal car

As with personal car leasing, the first step involves picking out the car you’d like to use for your business. Our website enables you to search using a wide range of filters, so you can quickly narrow down from the hundreds that are available. You can also search by engine and emissions, which is ideal for businesses who are able to benefit from VAT breaks if certain levels are achieved. For example, as of May 2019 a car emitting over 130/km of Co2 can claim back 85% VAT, or if the engine emits below that threshold, the business can claim 100%.

Step 2: Getting a quote

You may have chosen a few cars you’d like to get a quote for, and the next step requires you to provide more details about the contract. For example, how long do you want to lease the car, and what is the maximum number of miles it will be driven during the contract term? For a small additional cost, there will also be the option to add on a maintenance and insurance package, which will cover insurance, servicing, minor repairs and other benefits during the term. You can either complete the quote details on the website or if you have more questions you need answering, call our support team who are always available to help.

Step 3: Finance application

Business car leasing requires the company to go through a credit check in order to drive the car away. This involves us sending off your application details to one of our financial partners who will check your credit rating. They may also request additional information about the business and the director(s) in order to reach a final decision. The reason for this is for them to ensure the business will be able to continue making the payments for the full length of the contract. The information they may request can include:

  • 3-6 month's bank statements
  • Names/addresses of director(s)
  • Opening balance sheet (if available)

In some cases, you may not be asked to supply any of the above. Although it is better to have the information available, just in case.

Step 4: Finalising your order

With the credit check completed, you can now finalise the order for your lease car. It is important to read the order form carefully, to make sure all your details are correct and you are happy with the deal you are signing up to. Your dedicated Account Manager will also take the time to orally verify the contract particulars, to ensure we are ordering the vehicle you require. You can then sign the contract and we will send it off to the supplier for the next stage of the order.

Step 5: Sign off the financial documents

The financial documents are another important part of the process that needs to be completed. These can be sent to you via email for you to review in your own time. All you have to do is read through them, and if all is ok, sign and return them back to your Account Manager. Most of our contracts now use e-signature which speeds up the whole process.

Step 6: Delivery of your car

When assessing which car to order, the Account Manager will be able to provide estimates on how long it may take for the vehicle to be delivered. We will have a clearer idea once the order has been confirmed and the manufacturer informs us of their production schedule. There are some instances where the car is already in stock, which means it can usually be delivered in as little as a couple of weeks. If it is coming from the factory where it is being produced, it will usually take a bit longer for the delivery to take place. We try to keep our customers up-to-date as soon as we get clarification from the manufacturer, so you can arrange the start date of your insurance.

What happens when the lease ends?

Towards the end of your lease contract you will be contacted to remind you of the return date of the vehicle. Once the car has been collected, it is then taken back for inspection. This is to check for any damage to the vehicle and to verify how many miles it has been driven. To get an idea of what will be looked for during the inspection, take a look at our Fair Wear and Tear Guide which outlines the general expectations surrounding the condition of the car.

As you will have noted in your contract, there will be a clause related to the ‘wear and tear’ of the car. The amount you pay on a monthly basis is based on the value at the start of the contract, and the predicted value at the end, which is calculated by agreeing to a mileage limit and assuming the car will be returned without any excessive damage.

If the car is returned with damage that is deemed to be a result of poor treatment, negligent behaviour, or was caused by an unreported accident, then you may have to pay for the repair work. As the mileage will also be checked, there can be additional costs if the car was driven excessively over the agreed limit stated in the contract.

Once the checks have been completed, you will have the option to either take up a new lease or walk away without any more charges.