When your beloved work vehicle decides its days are numbered and is no longer getting you from A to B without some serious problems, it’s time to consider a new motor. It’s your livelihood at the end of the day; if you can’t get to work then you can’t earn any money!
So, it’s all very well shopping for your next work car or van but can you afford the model you need? If it’s looking pricey for the length of time you’re going to be using it then perhaps you should consider leasing a new business vehicle. Here are eight things to consider before you take the plunge.
You can get a brand new vehicle
If you like to be in a new vehicle rather than buying a cheap and much older vehicle, then leasing is a great option for you. You may never actually own your car or van but at least it’s brand new and reliable, plus, once you get to the end of the term you can either return it or take out another new vehicle. You also have the choice of a vehicle make you perhaps didn’t think you could afford before, perhaps a top spec Citroen van on lease or a popular Ford model.
Very little maintenance costs
Some lease packages include maintenance and breakdown cover as an optional extra. This means, if you don’t have the funds to fork out for maintenance costs, as the vehicle depreciates, then you can save money and rely on the lease company to fix it. This type of cover does not come as standard, so check first if your leasing company offers a maintenance contract.
You don’t have to put yourself into debt buying the vehicle in the first place, and essentially all you’ll be paying for is fuel if the company you’re leasing from has offers that cover everything else, so without this extra responsibility all you need to worry about is getting the job done.
Removes some risk
Of course, hopefully the day will never come where you have to pay off business debts if you go under. But, if it does – a leased vehicle can’t be counted as an asset and therefore it can’t be used to pay of your debts.
Watch your mileage
A slight negative to leasing a vehicle is the restrictions. It is quite common to be given a mileage restriction to keep the vehicle at a certain value. Pay close attention to this and look into what charges you could face if you exceed the limit.
The tax situation
If you’re a small business, you will have to pay company car tax on the vehicle that you are leasing because some of your mileage is accounted for personal use. However, if you lease your car through Business Contract Hire then you can claim up to 100% tax relief on the lease rental – which is great news. This fluctuates between different rental companies so ensure you do your research before you sign anything.
The down payment
If you’re sold on the business lease idea with the tax relief on the monthly payments and a brand new car to play with, have you also considered the down payment? Usually the minimum to get involved with a leasing company is an initial rental worth three months in advance, so look into this carefully and check that you can afford it.
Improved cash flow in the business
With no maintenance costs hanging over you, as well as no debt from having to take out a loan for a new or second-hand vehicle, you should find that there is better cash flow within your business. It’s a comfortable position to be in and you won’t have to worry that if something does go wrong you’ll have to pay for it, as your covered by the leasing company!