Buying a car is a big purchase and can be costly for business owners, this it is important that you approach the decision wisely. Whether you need it to travel to meet clients, get to events or simply travel into the office, a company car boasts numerous benefits. Before going ahead and purchasing the first option you find, there are a few factors to be considered.
The financing options you use for the purchase is one of those factors. Now that car leasing options are a lot more attractive, you need to know how to use these options to your advantage and how you can save money by doing so.
The Down Payment
One of the main advantages of leasing a car is that you don’t have to pay as high of a down payment as when you choose to buy one using a car loan. In fact, many dealers and leasing companies now offer leasing deals that don’t require you to pay a down payment at all.
There is another big advantage you can gain right away, and that is the lower sales tax and other fees associated with getting the car. Make sure you negotiate the best deal possible with your dealer and that you understand the cost elements added to the leasing agreement.
Better Cash Flow
Another great thing about leasing is the lower monthly payment amount, which is why this financing option is perfect for when you want to keep your cash flow healthy. For businesses, leasing is the perfect way to build a fleet of car without sacrificing other expenses.
Start-ups and small businesses can choose manufactures such as Citroen to lease a car for as little as £130 per month. This would be the ideal option to provide to your sales team to ensure they can all get around without it costing the business too much. If your business can afford something more flashy, even if it’s just a temporary, you can even find Porsche leasing deals for models like the Porsche Macan and Porsche Cayman if you look to the right suppliers. If you are going to spend more money on a company car, it should be for the executive/owner of the business unless you entrust your staff enough to use it (or can afford it!).
Leasing deals usually come with a mileage limit. This is to limit the costs of maintaining the car and keep it in good condition. You still have the option to keep the car at the end of the lease, but you can also find a newer model and start another lease.
The mileage limit is also why the monthly payment amount is very manageable. Using the previous Porsche leasing example, you can pick up a 5-door Porsche Macan for no more than £450 per month. You don’t have to worry about expensive maintenance costs either when you drive less.
Let’s not forget that leasing is also the better financing option if you want to save more on your taxes. You can still claim the usual emission-related tax benefits, plus you can reclaim your VAT in most circumstances.
If you only use the car for business purposes, you get to claim 100% of the VAT. If you use the vehicle for both business and personal purposes, then you can refer to the calculations provided by the HMRC to find out just how much you can reclaim in VAT.
It is easy to see when to use leasing as the best financing option, especially if you are getting a car for business reasons. Be sure to use the tips we covered in this article to also save money on your next lease.