1. Improved cash flow
Buying a car outright can see your cash flow take a big hit. On the balance sheet this would stand out as a large liability and could also have an effect on your ability to secure more lines of credit if needed. However, leasing a car often requires far less money to be spent upfront and allows you to budget for a fixed cost across a pre-agreed period of time.
This means not only will the balance sheet look healthier, but your cash flow will not be stretched by paying out tens of thousands of pounds. It frees up the money that would’ve been spent on buying the car to be used on other important areas of the business to help it grow. You also won’t be wasting cash on an asset that begins to depreciate the moment you turn the ignition key for the first time.
2. Avoid spending money on a depreciating vehicle
Finding the large amount of money needed to pay for a brand new car is difficult enough. But it’s even more disconcerting that the value of the vehicle will only ever go down, which means when you come to sell it, you never reclaim its real worth.
The money you pay each month for a business car lease factors in the depreciation of the vehicle for the duration of the contract. This is why it is cheaper than car finance, and the fixed cost you are paying is a fair reflection of the asset you receive. Once the contract is over, you can simply walk away or order a new lease car, without any of the stress of dealing with selling and recouping your money. This avoids any risk of negative equity.
3. Improved safety for staff
If you can’t afford to buy a business vehicle outright, you may be tempted to look for a second hand car as an alternative. In terms of cost, this can have advantages depending on how much you can afford, but you may not be able to provide a car to staff members that includes the latest safety features. A new car is more likely to have extra safety features than an older vehicle, plus all lease cars come with a manufacturer’s warranty too, for extra peace of mind.
4. Eco-friendly cars can save you money
When it comes to business leasing, due to the lower costs you are more likely to be able to afford a better car with the latest fuel economy that will make life much better for drivers.
With the current cost of fuel in the UK, an energy efficient or eco-friendly vehicle should save a substantial amount of money for the business in comparison to an old used car. Not only that, but an economical car might have lower CO2 commissions, which could provide the business with further tax advantages.
5. It’s often cheaper than personal leasing
Securing a business lease deal is usually a cheaper option than a personal lease. This is because of the VAT breaks that are available. First and foremost, you must be VAT registered to be able to take advantage of these perks. If you are, this means you can claim back at least 50% of your initial and monthly costs. This concession is based on the assumption the car will be driven equally for personal and business use. 100% can be claimed back if you can prove the car is used purely for the business and left on the company premises overnight and at weekends.
6. Reclaim costs through corporation tax
When you take out a business car lease, you agree to a mileage allowance. If this is exceeded, you will be asked to pay an excess mileage charge to the leasing company – though at Leasing Options, it could be as little as 1p per extra mile.
Limited companies are able to offset 100% of the payments and VAT against their corporation tax. By taking out a maintenance package with the business car lease, you can claim everything back on that too.
When it comes to car emissions, any car you lease that releases less than 110g/km allows you to claim back 100% against your income. Cars emitting 111g/km or more are able to claim 85%. If you have leased a van instead of a car, then you can claim 100% regardless of the emission rate.
7. Enjoy business related discounts
When you lease a business car, you are in control, which is good news when it comes to securing a favourable deal that could save the business money.
You may be able to strike up an even better deal if you are looking to lease multiple cars for your business. It also pays to take advantage of a leasing company’s expertise, as they will know the current market and the latest models that are due to arrive soon.
Plus, here at Leasing Options, our Price Match Promise is perfect for putting you in a great position financially, as we’ll match any like for like lease deal out there – or give you £50 if we can’t beat it.