It’s a great feeling getting into a brand new car and breathing in that ‘new car’ smell, but it’s a sad but true fact that in the motor industry, as soon as your shiny new toy has been driven off the forecourt, it has already decreased in value. For a business, this equals an immediate guaranteed loss.
Purchasing property or land may provide your company with some additional income as time goes by, but motoring is unfortunately not one of these areas – something that Paul Getty, oil tycoon, summed up perfectly: “If it appreciates, buy it. If it depreciates, lease it.”
2. Fixed price motoring
Purchasing a car can be expensive – at the very least, it is when you compare this to purchasing a second-hand motor, something most companies will not be on the market for. Leasing has its benefits, and cost is one of them. If you were to buy the next ‘it’ car, the cost would be significantly larger than that of leasing it. When you lease, you only own the car temporarily, and therefore you only owe a chunk of the original cost.
3. You can reclaim the VAT
According to HM Revenue & Customs, if you lease a car for business use then you are able to claim back 50% of the VAT. This isn’t a larger amount due to the assumption that employees will also be using the car for some personal use. However, this 50% limit will not apply if the car is used exclusively for business, meaning further VAT claims could be made – something that is not valid when the vehicle is purchased outright.
4. Appearance is everything
The reason companies may opt for company cars at all – leased or not – is because there is an air of professionalism about having a new car as opposed to a five year old motor with general wear and tear. When appearance needs to be upheld, car leasing allows a business to take advantage of all the latest technologies and models in motor advances, by updating their fleet every few years benefiting from all of the attractions of owning a new car, without the price tag.
5. Avoid the hassle
If for no other reason, car leasing can reduce plenty of the hassle that can be associated with purchasing a fleet of company cars. They will have professionals advising on which cars are most efficient, which will give tax relief, and which ones will best suit your financial constraints.