Although the humble company car is often taken for granted, it does have an important role to play in business. Take a start-up company for example. If you have an unreliable vehicle that keeps breaking down, then chances are you’ve probably missed a few very important appointments that could have led to more business.
So we’ve established the fact that you have to have a reliable vehicle, but when working capital is tight, do you really want to tie a good percentage of it up in a depreciating asset? For this reason, vehicle leasing may well be the smart move.
If you think about it, with a vehicle you’ve bought, you not only have to record it on your books, but you’ve got the hassle of regular maintenance and the added stress of trying to sell the vehicle when you want to swap it for a newer model.
Vehicles are generally considered one of the top two or three expenses that any start-up business will have and as a result it can have a large impact on your bottom line. So what benefits might a start-up business get from leasing their vehicles?
–Lower Payments
Most car leasing deals only require a limited payment up front (usually 3 months plus the first payment) so if a Ford Focus is leased at £350 per month you may well have to pay an initial fee of £1400.
However, if you wanted to buy the car outright it would cost you around £13,000. That’s a large chunk of money tied up in an object that’s likely to depreciate heavily in its first year; and one that may well be worth around 50% less (depending upon the mileage).
–Always Have a Reliable Company Car
With a leased car you are guaranteed a hassle-free experience. All vehicles are serviced regularly so you can rest assured that your vehicles will always get you to where you need to be, without fear of breaking down.
Even during servicing, you’ll always be given a vehicle, so you’re never left without one. In addition at the end of the contract period, you can hand the vehicle back and make a contract for a new one.
–Low Risk
As your business never actually owns the vehicle, there’s never any residual value risk involved. At the end of the agreed period of time, it’s the leasing company who will be responsible for selling the vehicle.
As you can see running a company car doesn’t have to be a headache and if you go down the vehicle leasing route, not only will you get a new car to drive every three to four years but you’ll save thousands of pounds in the meantime which can be invested straight back into your growing business.
