Many business owners will, at some stage, want to change their company vehicles. This inevitably leads them to wonder what’s the best option for their business – leasing or buying? Traditionally, buying a vehicle was seen as a sounder business decision, since you own it outright and have no ongoing costs (other than your tax and insurance etc).
However, with an influx of small to medium-sized business joining the commercial market, things are changing and opinion has swung into the opposite direction. For many, the idea of leasing their next commercial vehicle is now considered to be the smarter choice.
Leasing – you don’t own it, you rent it
What was once considered to be the biggest downsides to leasing, is now seen as a major benefit. Yes, you don’t own the vehicle outright, however this has financial, operational and administrative benefits.
Leasing your commercial vehicles means you get access to the very latest technology, without the upfront purchase price. As you’re only renting your vehicle, you can upgrade every couple of years, rather than take the hit on resell prices at that time. Most finance agreements have flexible end-of-term options, including an option to update to a newer model, if you’d rather. There’s also the option to buy the vehicle at the end of your lease, if you happen to want to keep it.
Financial benefits of leasing
Primarily, a leased vehicle doesn’t tie up your capital. When you buy a vehicle, that vehicle is immediately losing value – making it an inefficient use of your business finances. This is a major consideration for many SMEs, when they can often spend their business capital more effectively elsewhere.
Budgeting is also easier with leasing, as you know exactly how many payments you’re making up front, as fixed term agreements are usually from 12 to 60 months. You’ll also know the exact monthly payments too, as all payments are the same, so you can effectively plan ahead with your finances.
Not only that, but you also save money on the VAT, with a leased vehicle, as VAT is paid on the rental amount, not the purchase price. Asset repayments in a leasing agreement also count as a business expense, so they’re tax deductible.
Leasing cuts out the worry of maintaining the vehicle too
Maintenance costs for your commercial vehicle can be passed over to a professional organisation, with the costs for maintenance being added to your lease. This can save you a huge amount of money and unnecessary worry, as maintenance contracts cover vehicle services, replacement tyres and repairs.
Finally, if you already own your vehicles, all is not lost – you still have options. Some leasing companies can arrange a sale and leaseback deal, that enables you to convert your fleet of vehicles to a lease arrangement – giving you one less thing to worry about!
Totally Vans is a trading name of Motor Vehicle Solutions Limited
Motor Vehicle Solutions Limited is authorised and regulated by the Finance Conduct Authority for consumer credit activities (Firm Reference Number 664382). You can check this on the FCA Register by visiting the www.fca.org.uk or by contacting the FCA direct on 0300 500 8082. Motor Vehicle Solutions Limited is a Credit Broker not a Lender.
Totallyvans.co.uk , is a trading name of Motor Vehicle Solutions Limited, a company registered in England no 7499110. Registered Office College House, 17 King Edwards Road, Ruislip, Middlesex, HA4 7AE. Vat Reg No 172106831. Data Protection Licence Z253407X