To Buy or Lease Your Company Cars?
Most company cars and vans, these days, are financed by either outright purchase or a leasing contract. Each has is positives and negatives.
Purchasing Outright
The main advantage of outrignt purchase for businesses is that they own the vehicles. When the car or van has been paid for it belongs to your company. This means that you can sell the car to retrieve some of the purchase costs or even offer the opportunity to purchase the vehicle to your employees.
The biggest disadvantage for most companies is the need to pay the full cost of the car or van, either as a one off payment or by means of a finance plan. And if your company runs a fleet of cars and vans you will have some significant expense. Finding enough funds to purchase vehicles outright can cause businesses some unwanted cash flow problems.
Businesses must be prepared to cover additional expenses including maintenance, insurance and breakdown recovery.
Company Car Leasing
The key advantages of company car leasing to business are the benefits it brings to cash flow. The initial down-payment on a new lease contract are generally very low and the monthly payments, spread over an agreed period of two or three years, are fixed and known in advance. This is what company accountants love about leasing. Budgeting is so much simpler when they know exactly how much the company transport costs are going to be.
Also, most leasing companies will offer to cover the costs of all vehicle maintenance as part of the contract. They may even ofer to include broken windscreen cover and replacement tyres.
Although car insurance is not normally included in the lease contract it is often offered by the leasing company as an optional extra which, if accepted, is generally cheaper than it would be if purchased separately.
One of tne main disadvantages for many businesses is that the cars and vans never actually belong to them. Many businesses would actually see this as an advantage as it means they don’t have to concern themselves with vehicle disposal when the lease expires.
A disadvantage for the driver is that the government considers a company car as benefit in kind which makes it taxable. A higher rate of taxation now applies to company cars since recent changes to the UK tax laws. There is, however, a tax adavantage for your company as you can claim for the vehicle as a capital cost and offset this against your company profits.
Clearly there are many factors to bear in mind when a company is considering either to lease vans and cars or to purchase them outright. There is currently so much competitionn for business amongst car leasing firms that shopping around is likely to give you a particularly good deal. Many leasing companies provide additional incentives such as free breakdown cover and even flexible mileage plans. So it makes sense to shop around, get quotations from several reputable companies and don’t grab the first leasing deal that comes your way.
Related posts:
- Vans and The Postal Service Believe it or not without the van in the postal...
- How To Get An Affordable Van Buying a van is not an easy decision to make...
- The Pros and Cons of Automobile Leasing Cars: Lease or Buy? There are many benefits associated...
- Insuring Your Work Van Properly There are hundreds of thousands of business van owners who...
- Here is how Citroen are Winning Awards Citroen Berlingo 1.6 16V (109 PS) Tonic Edition 0-100...
