How to lease a car for business

28/09/2021 | Steve Lumley

How to lease a car for business

If you want to know more about how to lease a car for business, then Tilsun Leasing can help put you behind the wheel of a brand-new car.

Whether you are looking to lease a car for business purposes, or need a fleet of contract hire vehicles, or even a van, then business car leasing could be for you.

That's because there are some advantages to leasing a car for business rather than buying outright.


What is business car leasing?

Essentially, the term business car leasing is used to explain the process to rent a vehicle from a leasing company.

It can be used by all types of businesses, from limited companies, partnerships to sole traders.

Some car leasing firms may also use the term ‘contract hire’ which means the same thing.

It's also important to appreciate that business contract hire works along similar lines to personal car leasing but it's a cheaper avenue to pursue. We explain more later in this article.

How does leasing a car for business work?

The process of leasing a car for business is straightforward and you simply:

  • Choose the car you would like to lease for your business on the Tilsun Leasing website
  • Speak to one of the friendly team to talk about your requirements
  • Your business car will then be delivered to your door
  • You will agree to lease the car for either two, three or four years and agree on an annual mileage limit.

And once the contract ends, you simply return your contract hire business car and choose whether you want to start a new lease and get behind the wheel of a brand-new vehicle.


What are the benefits of leasing a business car?

There's no doubt that business car leasing has grown in popularity with firms of all sizes, as well as sole traders.

That's because a business leasing a car will benefit from:

  • An affordable monthly rental

Leasing offers fixed monthly payments over an agreed time to make budget planning easier. The mileage and contract terms are flexible so there's a deal to meet your own business requirements

  • Cash flow

Rather than having to buy a brand-new car or van outright, you will be helping your cash flow by paying a fixed amount every month. That means that the cash in your business can be used for other purposes.

  • Vehicle depreciation

When you lease a car, there's no depreciation risk because this is an issue for the finance provider. You also don't have to worry about disposing of a lease car when the contract ends, you simply hand it back to the leasing company.

  • Brand new cars

When you lease a car for business, you will enjoy a brand new car, and you can change this vehicle every two, three or four years depending on how long you sign a leasing deal for. When you change to a new car, you'll enjoy the latest technology, safety and security features. For many businesses, driving a brand new car projects success to potential clients.

  • Easier maintenance

When you lease a vehicle for business, the servicing and maintenance bills can be included in your monthly rental amount. This helps to spread the potential cost and Tilsun Leasing offers maintenance packages to bring peace of mind motoring. However, you will still be responsible for any damage caused to the business lease vehicle under ‘fair wear and tear’ rules.

  • Recover your VAT

As a limited company, you can recover your VAT and 100% of the payments against your corporation tax bill - if that car is used solely for business purposes. If there is some private usage, then you can recover up to 50%. Don't forget that when signing up for a maintenance package with Tilsun Leasing, you can also claim up to 100% of that portion too.


Is your business eligible to lease a car?

As with personal leasing, when it comes to a business contract hire deal then your firm will have to undertake a credit check.

This is part of the finance application process, and this credit check is used to deliver a final decision.

Should your business be less than two years old, then the leasing company may ask for extra paperwork including a director’s guarantee for a limited company and three months of business bank statements. They may also require a larger initial rental.

Information needed to lease a business car

Along with a credit check, any business wanting a contract hire car deal will need to supply some information including:

  • Your company details: This will be the firm’s company registration number, the registered address and its registered name. And if it's VAT registered, then the VAT number and the annual turnover
  • Bank details: The company bank details including the account number, sort code and name of bank will be necessary.
  • Director details: The names and addresses, as well as the date of birth and their marital status of directors would be needed will be needed.


Tax advantages of leasing a business car

As mentioned, there are some advantages to business car leasing including some positive tax implications.

Firstly, your monthly instalments can be reclaimed as a business expense, along with fuel and road tax.

The amount that you claim will also depend on the emissions of the vehicle concerned.

For a leased car that you solely for business, you can reclaim up to 100% of the VAT element.

Should the car be used for personal use, then this figure is reduced to 50%.

Also, if you choose a maintenance package with your business car lease agreement, then 100% of the VAT element can also be reclaimed.


Business car lease insurance

One of the big questions when leasing a car for business, is the issue of insurance - who pays for it?

With a business car lease, it's the company that will cover the insurance costs, and they may also cover the fuel bills too.

The insurance certificate for a leased business car should be in the company name or in the name of a director.

Should the business car be driven by an employee, then the car leasing company may need a letter on headed paper stating this purpose and that the employee is authorised to drive a contract hire car.


Apply for business car leasing

If you would like to know more about business car leasing and the positives for a firm, then now is a good time to speak with the team at Tilsun Leasing to find out more and to discuss your needs - contact them today on 03330 040 888.

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Lex Autolease
Leasing Broker Federation

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