CarLease UK recognise that car leasing (by which we specifically mean Contract Hire) is the fastest growing vehicle procurement method for businesses. If you are a sole trader, partnership or limited company looking for a vehicle, leasing should definitely be considered as part of the leasing v buying debate.

Why should my business lease a car?

  • Fixed period of car ownership ranging from 2 years to 5 years;
  • Option to include a maintenance package to cover servicing, maintenance and tyres i.e. "fully-maintained" lease;
  • Fixed rentals for the whole package, making budget planning easier i.e. certainty of cost/fixed cost motoring;
  • Flexible terms to meet your requirements with variable duration and mileage terms;
  • (as at the time of this article) Leasing removes depreciating assets from the balance sheet and the associated risks of owning vehicles;
  • If VAT registered, your business can claim back a proportion of the VAT on the finance rentals and the maintenance rentals; and
  • Above all, no depreciation concerns.

Why should my business buy a car?

  • The business can own the car as an asset;
  • Flexibly sell the car at any time during ownership; and
  • The car can incur as much, or as little mileage, as you require.

Both leasing and buying a vehicle possess a number of key benefits. However, both do have drawbacks which need to be carefully considered.

Drawback of my business buying a car?

  • Typically requires a large upfront payment/deposit;
  • You are subject to the uncertainties of depreciation;
  • Inability to include a maintenance programme (and therefore undertake cost of maintaining the vehicle);
  • Your business will be unable to secure a preferable level of “fleet discount”;
  • You have to undergo the hassle of selling the vehicle.

Drawbacks of a business leasing a car?

  • Contract is relatively inflexible – your business will need to pay an early termination fee to end the contract;
  • There are costs/penalties at the end of the contract if you do not maintain your vehicle in accordance with the funder’s requirements. If the vehicle exceeds the contracted mileage, excess mileage penalties will apply; and
  • You do not own the vehicle.

As you will see above, both methods of car procurement offer positives and negatives to any business. That being said, over the last 15 years car leasing (contract hire) has become the fundamental product of choice for business users when funding their cars. At the heart of this decision, is that businesses need certainty of cost for effective financial planning and businesses simply do not have the time to organise the buying and selling of cars.

What does my business need to do to organise a quotation?

In terms of producing a quote, if you could review the below before speaking with the team at CarLease UK we should be able to assist you quickly with the appropriate information:

  • Vehicle – which car are you seeking to procure? It is important to identify a particular car in order to produce a quotation;
  • Term – how long do you need to lease the vehicle for? As this is a long-term vehicle procurement method, the minimum contract period is 2 years and the maximum is 5 years. Generally, the longer you lease the vehicle for, the cheaper the monthly rentals are;
  • Mileage – how many miles do you drive per annum? The cost for the vehicle will depend largely on the miles covered, as this inherently linked to the depreciation of the vehicle. The more miles covered per year, the more expensive the rentals will be; and
  • Maintenance – while a contract does not have to include a maintenance package (to include the cost of servicing, maintenance and tyres), it is highly recommended to include this as part an agreement. As all contract hire vehicles must be maintained in accordance with the manufacturer’s recommendations it is often much more cost effective to include this into the contract, as opposed to doing this yourself.

In terms of finance, CarLease UK work alongside Network (part of Leaseplan), Lex Autolease and Hitachi Capital, the UK’s leading car funders. As such, not only can we offer the strongest deals but we can also deal with a variety of requests, ranging from high mileage quotations to complicated large fleet management. We are confident our dedicated account managers will be more than capable in dealing with your bespoke requests.

While this should hopefully answer some of your queries, if you do require any further information about any of the above, please do not hesitate to speak with the team at CarLease UK today. Contact us by calling 01942 608 606 or by emailing enquiries@carlease.uk.com

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