The trend of business leasing is gaining popularity in the UK as individuals and enterprises search for cost-effective ways to acquire new vehicles. Businesses, in particular, are opting to lease fleets of new cars and commercial vehicles as they can easily return them at the end of the lease and get another new one. Additionally, the need to have highly economical and up-to-date business vehicles has become crucial to brand image and financial savings in the long run.
There are two options for companies that require one or a few cars for their business. They can either buy or lease. In this article, we will discuss how leasing your business vehicles can help save money especially during uncertain economic times. Leasing involves acquiring a new vehicle of a higher specification than you could afford to buy outright. The car is yours for the lease term, and it can be handed back to the finance company at the end of the lease if it is in the correct condition. Leasing presents a new perspective of ownership, and a business pays a monthly rental charge for each vehicle calculated based on the vehicle’s value and CO2 emissions. Leasing reduces the burden of managing business outgoings, simplifying the process even further when extras such as a maintenance package are added to the lease.
A maintenance package can cover yearly servicing, like-for-like tyre replacements, and roadside assistance, saving a business from unexpected and costly expenses. A business could be entitled to claim tax back on the entire lease cost in an operating lease where the vehicle is handed back at the end of the lease term and isn’t owned by the company. This is because the tax payment is shifted from the car to the employee via a ‘Benefit-in-kind’ payment. This method of leasing is cheaper than using your car and expensing business mileage, and many small businesses are opting to save money on their company vehicles. When leasing, personal preference, budget deposit, monthly cost, and mileage allowance should be taken into account. Ferocious financial penalties apply if you go over your mileage limit, and car insurance won’t be included in the cost. However, fully comprehensive car insurance is no more expensive than for a non-leased car.
If you or an employee risks damaging the car, you might incur additional repair fees or lose some of your initial costs. Finally, if you can’t afford the car you want upfront, opt to buy it under a business lease purchase and become the legal owner at the end of the contract. You will make a payment, also known as a balloon payment, at the end of the contract, which will be on top of your deposit and monthly payments throughout your lease. In summary, business leasing presents a cost-effective solution to stay up to date with the latest vehicle technology, enhance brand image, and save money in the process.
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