Getting to grips with business car leasing: a guide
As someone responsible for managing a fleet, it's essential to understand the various vehicle acquisition options available for your growing business.
Business car leasing is a cost-effective alternative to purchasing your vehicles outright, offering flexibility and efficiency.nIn this blog, we’ll explore the ins and outs of business car leasing, to help you determine if it's the right choice for your company.
What is business car leasing?
Business car leasing offers a convenient solution for companies that might not have the finances to purchase vehicles outright. With a fixed monthly fee, agreed-upon duration, and mileage, this option provides access to new vehicles without the burden of depreciation and maintenance costs that come with ownership. This streamlined approach makes car leasing an attractive choice for businesses looking to efficiently manage their fleet.
However, it's crucial to be mindful of contractual stipulations which may lead to extra charges, such as excess mileage, vehicle condition upon return, and those associated if you want to end your contract early. By understanding the different business leasing options available and their respective benefits and considerations, you can make an informed decision which suits your company's needs and budget.
Different types of business car leasing: benefits and considerations
Option 1:
Business Contract Hire
What is it?
This leasing option enables you to rent business vehicles for a predetermined period of time and mileage under a Master Hire Agreement.
With Alphabet, you can conveniently manage your vehicle online or through an app, utilizing services such as Servicing and Maintenance, Accident Management, and Daily Rental bookings.
Upon the contract's completion, you will receive a revised duration, mileage, and monthly rental cost tailored to your needs.
Benefits
- Fixed monthly payments
- No depreciation concerns
- Easy vehicle return or extension at the end of the contract
Considerations
- Potential charges for excess mileage and vehicle condition upon return
- Early termination fees
Option 2:
Finance Lease
What is it?
With Finance Lease, your business vehicles sit on your balance sheet while you enjoy the flexible operating and finance benefits of Contract Hire, including fixed monthly payments which can be adjusted to fit your budget.
At the end of the agreement, you can either sell the vehicle to a third party (keeping any profit after covering the lump-sum payment) or pay the final value and retain the vehicle.
Benefits
- Fixed monthly payments
- Flexibility to sell the vehicle or continue using it
- Potential profit from the sale
Considerations
- Vehicle ownership sits on your balance sheet
- Responsibility for covering the final value or lump-sum payment
Option 3:
Contract Purchase
What is it?
This leasing option provides you with the advantages of a managed vehicle and the opportunity to buy it at the end of the contract.
You can enjoy potential tax and VAT benefits, and then either return the vehicle when the agreement ends or pay a pre-determined payment and Option to Purchase fee to take full ownership.
You also may have the option to extend the contract, however this must be done several months before the contract is due to expire.
Benefits
- Fixed monthly payments,
- Tax and VAT benefits
- Option to purchase the vehicle at the end of the contract
Considerations
- Additional cost for Option to Purchase fee if you decide to buy the vehicle
- Early termination fees
How we can help you choose the right business vehicle leasing solution
Our team of experts understand the intricacies of business car leasing and can help you determine which leasing solution suits your company's needs and objectives. We recognise that every business is unique and will work with you to offer leasing options which cater specifically to your company's requirements, ensuring the most cost-effective and efficient solution for your fleet.
In addition to providing leasing solutions, we offer a wide range of fleet management services, including Accident Management, Driver Risk Management, and Daily Rental options to support your fleet throughout the leasing period.
Take the next step
Reach out to us on 01252 976 010 to determine if business car leasing is the right choice for your company.
Our team is prepared to assist you in navigating the world of fleet management and ensuring your vehicles are properly managed and maintained.
