What is Business Leasing?

How does business leasing work?

Another term for business leasing is ‘business contract hire’ and this effectively describes the process of a business providing a vehicle for an employee on a lease basis. This means that neither the employee nor the business owns the vehicle, it is owned by the lease company.

With a business lease deal, you will agree a lease term and a fixed monthly payment in return for the exclusive use of the vehicle for the duration of that term. Then the vehicle will be returned to the leasing company. The vehicle can be used for both business and personal mileage, and business leasing does not just apply to perks such as a company car, it also applies to vans used for deliveries or carrying equipment and materials. In this sense, business leasing often forms part of a ‘fleet’ deal, whereby a number of vehicles are leased by a business and managed accordingly.

How are business leasing and personal leasing the same?

As we have mentioned, there are many similarities between business and personal leasing:

• Both work by agreeing a set lease term, which is usually between 12 months and five years.

• Both require a mileage restriction to be agreed, which is an annual mileage which you can’t exceed because it adds to the depreciation cost for the lease company. If you do exceed this, the business faces extra charges. For a business lease deal, typically this annual mileage will be higher, because the employee will likely spend more time ‘on the road’ in the vehicle than through a personal lease deal.

• Both require a deposit to be paid to secure the deal.

• Both lease deals usually include service and maintenance agreements, road tax and breakdown cover in the fixed monthly payments.

• In both scenarios the vehicle is returned at the end of the lease term, it is never owned or kept by the user.

Why is business leasing cheaper than personal leasing?

The main difference between business leasing and personal leasing is that a VAT-registered business can claim back 50% VAT on the monthly payment they make for the vehicle, and 100% VAT on the maintenance agreement. This only applies if the vehicle is leased by a VAT-registered company and therefore doesn’t apply to personal leasing where the price includes VAT.

In order to qualify for this, the business must deduct personal mileage from the total mileage declared, because personal mileage is subject to VAT. Many businesses are able to manage this by asking employees to keep a record of their personal mileage, but some businesses restrict usage of the vehicle to business mileage only.

What vehicles are available for business leasing?

Businesses can choose from a huge range of petrol and diesel cars from Pink Car Leasing and agree favourable terms for their organisation. We can also offer electric vehicle leasing, hybrid car leasing, and van leasing on a business lease basis.

What are the benefits of leasing vehicles for a business?

Many businesses are turning to vehicle leasing because it aligns with many cost saving and efficiency drives the organisation sets as objectives. These benefits include:

• Manageable costs– all motoring costs other than fuel and insurance are included in one fixed payment

• Depreciation– the business is not stuck with a depreciating asset on its books

• Liquidity– this available cash can be used elsewhere in the business

• Measurement– the mileage restriction forces businesses to closely monitor usage and driver behaviour, which can lead to compliance and cost improvements

• New vehicles– because the business is always driving new vehicles it benefits from improving technology, fuel costs and CO2 emissions

• Warranty and MOT– new vehicles will often remain under warranty for the length of the lease term, or a large percentage of it, while MOT costs are avoided for the first three years

• VAT– business lease vehicles are VAT-recoverable.

What are the benefits of agreeing a business lease deal with Pink Car Leasing?

• Pink Car Leasing has been in this business for many years and has therefore built strong and reciprocal relationships with all the top vehicle manufacturers. This means we can pass on the benefits of great lease deals on new vehicles in most cases

• Our price-match guarantee policy means we can always offer the lowest cost on the market, because we can match whatever price you receive elsewhere

• Many lease companies charge an admin fee, but not at Pink Car Leasing

• We can deliver your new vehicle anywhere within mainland UK for free

If you contact Pink Car Leasing today you will find the quickest route to supplying and managing your fleet in a cost-effective way.