Small businesses changing company vehicles on a regular basis can save a significant amount of cash on vehicle leasing deals. Small businesses are at their most vulnerable at the beginning of the venture; many owners plough their entire savings into the project. Business vehicles are usually acquired by loan or hire purchase cars. However, businesses that own vehicles fr a maximum of five years would benefit more from leasing.
Leasing is ideal for a small business. Businesses are at their most vulnerable in their early stages of growth. So rather than fork out a lump sum for a vehicle why not pay flexible monthly instalments and keep that extra cash for a rainy day. For instance, a BMW 3 series can cost £140 a month less on a four year car leasing UK deal than to buy a Ford Mondeo using a loan at 9.9pc over the same period. Leasing a vehicle will mean businesses will avoid VAT and receive a 50pc reduction on executive cars that are also used for personal journeys.
The problem is that a majority of smaller businesses don’t have enough knowledge of leasing to make an informed decision. However, leasing may not be the answer for everyone. Buying is a better option than leasing if you are planning to own the car for a 10-15 year period; if you’re looking at a 4-5 year stint then leasing is far cheaper. Approximately 2 million cars are sold each year in the UK, with around a million bought by consumers, 800,000 by fleet operators and 200,000 by businesses. It’s important not to rush into any deal, you don’t want to be stuck with a vehicle which you don’t need or want for the duration of the lease. It’s also important to read the terms and conditions of the contract very carefully.