10 aspects which make vehicle leasing an attractive prospect for businesses
Your company has gone from strength to strength in the last few years but the time has come to ditch your old motors. You’re fed up of the mismatched fleet your business is currently sporting and you’ve decided it’s time you went for more of a corporate, professional look. Good move! Investing in quality vehicles can help to move your business to the next level and driving a sophisticated car or van will even help to boost employee morale.
What’s your next step? Purchasing your own fleet of vehicles is an option. If the vehicles legally belong to your business they can easily be personalised and can be counted as a business asset, which will help to push up the value of your business.
Purchasing is a viable vehicle attainment method but I do want to make you aware of the downfalls. Purchasing your own fleet requires a large initial deposit; capital which many companies simply don’t possess. Although this might sound obvious, purchasing a vehicle simply means you own the vehicle and that it is your responsibility. This means any costs relating to the upkeep of the vehicle, e.g. maintenance and servicing, will come directly out of your pocket – outgoings which can easily mount up if you own a large fleet.
Another downfall of vehicle purchasing is the permanence of it. Once you own a vehicle it is yours until you sell it – something which can be surprisingly difficult due to the rate at which vehicles go out of date. Also, when you do sell your vehicles you’ll find that, more times than not, you’ll make a huge loss due to the fast depreciation rates of modern vehicles.
If you’re starting to believe that vehicle purchasing might not be the best option then it might be time to consider vehicle business leasing. This alternative option lets you lease a fleet of vehicles for a certain amount of time for a certain monthly lease fee. Here are the 10 top aspects which should convince you that vehicle leasing is definitely worth considering if you want the best for your business.
1. No depreciation worries: Unlike traditional purchasing options, when you lease a vehicle it still belongs to the leasing company. This means that once the lease is up you can simply hand the vehicle back to the leaser and either a pick a new vehicle or move on. Forget making a loss or trying to recoup some of your initial investment – leasing takes these financial worries away and leaves you with more time to concentrate on other key aspects of your business.
2. Low initial deposits: No matter how many vehicles you are leasing, you’ll only ever be required to put down a small initial deposit on each vehicle. The required deposit will ultimately depend on the individual leasing company but it will always be a figure which is radically smaller than the deposit required with vehicle purchasing.
3. Easy to lease a matching fleet: Leasing companies usually deal directly with the vehicle manufacturers themselves so are normally able to provide a number of matching models for fleet requirements. This means there’s no need to shop around to try and get a matching fleet because leasing companies should easily be able to provide a succession of uniform vehicles, no matter how large your demands.
4. Maintenance and servicing costs included in lease: If something goes wrong with your lease vehicle then you don’t need to panic. Maintenance and servicing costs are all included in the lease price so you can be confident your leased van or car will always be performing at an optimal rate. This feature means you won’t have to save capital “just in case”, leaving you free to spend your budget on more important business attributes.
5. Always have the latest models: If you’re a business that likes to be up to date with the latest models then you’ll love the flexibility that leasing offers. Because leasing companies deal directly with the vehicle manufacturers, they can offer the latest models at affordable prices. This means it’s easy to stay ahead of the game and with lease lengths starting from just 12 months, it’s clear your company will never be left behind in the style stakes.
6. Flexible mileage options: Vehicle leasing probably isn’t as limited as you’d think. While it’s true that you do have to estimate your vehicle’s yearly mileage, there are quite a few different mileage options on the market which are all reasonably priced. If you’re not sure how many miles you’ll drive in a year then it’s always best to be realistic and go for a lease which allows you to drive more miles than you think you’ll require. This means you’re far more likely to keep within your allowance and won’t be stung with any high fees for going over your mileage allowance.
7. Frees up capital: Because vehicle leasing doesn’t require a large initial deposit and includes key maintenance costs, it frees up a lot more capital than traditional vehicle purchasing alone. This means your capital will be much more flexible because it won’t be tied up in company vehicles or pricey finance agreements. This free capital could help you to commit to a new business deal or even expand your workforce. Either of these scenarios could make a substantial difference to your company and could ultimately change its very nature.
8. Opportunity to buy at the end of the lease: If you’re cautious about vehicle leasing and feel it might leave you with nothing to show for your money at the end of the agreement then you might need to consider vehicle contract purchase or hire purchase. Both of these leasing options allow you to purchase the vehicle via a series of monthly instalments and/or a balloon payment at the end of the lease agreement.
9. Variable lease lengths and options: Vehicle leasing is available to both businesses and individuals which means there are a range of versatile lease options to suit all. Lease lengths start from around one year and go up to around 5 years – the longer lease, the cheaper the monthly repayments. Although a long cheap lease might sound like an attractive prospect, you need to consider the practicality of the arrangement. Would you normally keep a business vehicle for 5 years and are you willing to make the same 5 year commitment to fleet vehicles? If not, it might be worth considering a lease with a shorter time commitment.
10. Tax advantages: When your business leases a vehicle, the government values it as a benefit in kind. This means that it is taxable; however you can claim your vehicle as a capital cost to your business and offset it against your profits. Other tax perks include car tax which is paid by the leasing company – if you have a fleet; car tax is something which can easily mount up so car leasing could save you a small fortune when it comes to key costs.