Having a smart, professional looking vehicle is important for most small businesses. Whether it’s just for visiting clients and potential investors, or a necessary asset for the running of your company (such as gardening and catering businesses), this can be one of the largest expenses.
Many will spend hours scouring the internet for the cheapest used cars and vans available. This isn’t always the most cost-effective method for sourcing a vehicle for your business though. For new and small companies especially, paying for a new or used car upfront can be a struggle and result in losing money in the long run.
Leasing a business car has a much smaller impact upon immediate cash flow. Rather than coming up with the full sum in one go, much smaller monthly repayments are made at a fixed rate across an agreed period of time.
This means you can easily budget for the payments and stop them if you run into financial difficulty. Leasing often includes maintenance costs too, so only the monthly payments and fuel costs are what you need to worry about. Depreciation value doesn’t affect your business either as you don’t own the vehicle so you don’t lose out on the resale value compared with buying it.
Similar to leasing except you end up owning the vehicle after all the repayments have been made. This avoids the company having to stump up with the full amount in one go, instead spreading it out over time. Useful for new businesses with little capital, it also allows the use and later purchase of more expensive vehicles.
If your company’s financial situation changes, rather than the amount owed continuing to rise as with a loan, the car will be repossessed. The interest included means this is a more expensive option than buying new in the long run but affordable for small companies to access a professional vehicle.
A highly tax efficient option for acquiring a business car. Finance lease gives the option of paying the full cost of a vehicle (including interest) over a period of time or making lower monthly payments with a final one based on the vehicle’s resale value.
A set mileage is agreed with fixed interest and payments making it simple to fit in with your budget. When all payments have been made you can continue to use the same vehicle under a peppercorn rent, at a much reduced cost, though never own it.