If you’re a small business owner who’s struggling to decide on whether to purchase a vehicle outright or lease one instead, don’t make a decision until you’ve read our breakdown. Here, we’re outlining the benefits of car and van leasing for SMEs as it might just give you the insight you need to make the right decision.
Don’t tie up your capital
Cash flow and capital are key when it comes to running a successful business. Those companies that opt to purchase their fleet of vehicles outright are inevitably tying up their capital unnecessarily when they could lease them instead.
Not only does this give you cash in the bank to spend on other operating expenses, but you know exactly how much each leased company car or commercial vehicle will cost per month with fixed-term rental instalments over 12 to 60 months. This helps you to help your business stay cash-flow positive over both the short and long terms.
When you buy a commercial vehicle, you’ll be hit with a 20% VAT charge upfront, which can be a big blow to the budget when you run a small business where every penny counts. If you’re looking to purchase a fleet of vehicles, then these charges are multiplied making it an expensive exercise to get your staff on the road.
Leasing a fleet of commercial vehicles, on the other hand, allows a business to pay VAT on just the rental amount and not the entire purchase price, making it a far more cost-effective solution to providing your team with a company car or commercial vehicle.
Leave the maintenance to someone else
One of the most attractive benefits of leasing a commercial vehicle or company car instead of purchasing one outright is not having to deal with maintenance or repairs.
Once you buy a commercial vehicle or company car outright, it is completely up to you to keep that vehicle roadworthy, so not only do you have to deal with getting it fixed, but you’ll also have to source a replacement for your staff every time the vehicle requires servicing or is off the road for repairs.
Plus, as the vehicle begins to age and starts to look a little tatty around the ages due to scratched paintwork and stone chips, you won’t be able to trade it in when your contract comes to an end and place it with a shiny new model as you would with a leased vehicle.