Many businesses large and small require vehicles. In this article we will consider financing the purchase of cars and vans that may be required for business use. Whether one or multiple company cars or vans, how to finance the purchase of essential vehicles is an important decision. We will briefly look at all the options for purchasing company vehicles, before focusing on leasing, what it is, the pros and cons, as well as how to get a vehicle finance lease deal for business.
Purchasing Company Vehicles
When investing in vehicles for your business you have several options, each with their own pros and cons, you can find more here. There are several different types of vehicle finance to choose from, or you could of course purchase the cars or vans outright. Simply buying the vehicles you require does not involve any finance, the benefit of this is not needing to pass any credit check, or having any regular repayment, and there would be no mileage limitations; however, you would need the initial capital to make the purchase.
There are also the more traditional vehicle finance options of business contract purchase (BCP) or hire purchase. BCP involves making lower, regular monthly repayments over a set period, the vehicle has a guaranteed future value that determines the larger final repayment, that you can choose to make and keep the vehicle or simply hand it back or trade in for a new model on a new deal. Hire purchase takes the full cost of the vehicle, plus interest, and splits it evenly over a set number of payments; at the end of a hire purchase agreement, you own the vehicle. Leasing is the other option, that we will discuss further below.
What is Vehicle Leasing For Business?
Leasing has primarily been a source of vehicle finance for business, however, increasingly some individuals have started to lease cars for personal use. Leasing is usually a cost-effective way of ensuring that vehicles for business are modern and fit for purpose, and lease deals can be arranged for cars and vans of all sizes and specification. When you lease a vehicle, you do so over a set period, usually 2-5 years, you pay an initial deposit, then a set number of fixed monthly payments, at the end of the period you hand the keys back.
Pros of Vehicle Leasing:
- Lower deposit and repayments than traditional finance options
- Set repayments helps cashflow
- Greater affordability could mean a higher specification is an option
- Road tax is covered by the lease agreement
Cons of Vehicle Leasing:
- The vehicle is not owned by the business
- There is no option to purchase the vehicle at any point
- Annual mileage needs to be estimated
- Additional mileage charges can be high
- Early termination of the contract may incur charges
- Vehicle must be maintained as per the lease agreement
When To Choose Leasing
Leasing is a good vehicle finance option for many businesses, whether you are looking for a single car or many different vehicles. Lower repayments and initial outlay are the biggest benefit. However, if you provide a car to employees, having modern, high specification vehicles that are replaced on a regular basis can help to attract the best talent to your company. If you can reliably estimate annual mileage, ensure that the vehicles are well maintained and have no need to own the vehicles at any point, then a lease deal is the ideal way to finance the cars and vans that are required within your organisation.
How to Secure A Lease Deal
There are many businesses that offer company car finance, you can go directly to one of these to organise the lease deal for the cars and vans that you require. However, that may not be the best option. As with any other type of commercial finance, using a broker, such as MC Commercial Finance, may help you to secure a better deal with less hassle.
A broker has access to a wide range of companies that offer vehicle leasing, they will know which company would be most likely to fit your requirements and have access to the number and types of vehicles that you require. They may also have access to exclusive broker only deals, as well as fleet management options to help you to focus on running your business instead of spending time focusing on company vehicles. Booking an appointment with us is your first step to hassle-free business vehicle leasing, we will help you to find the deal and complete the necessary paperwork to ensure that the process is as easy as possible.
MC Commercial Finance Ltd is authorised and regulated by the Financial Conduct Authority
(Reg number 948719).
MC Commercial Finance Ltd is an independent credit broker not a lender.
Company Registered Number: 12472873