Car Leasing Advice for Startup Businesses

Are startup businesses still on the rise in 2019, and do you think having a nice business car makes a good impression on your clients? Here you can find out more about car leasing, including what documentation you may need to provide when applying for a lease as a new start business. We have also included a checklist about top leasing tips for new start companies in order to help you get the best value for money.

The usual definition of small and medium sized enterprises (SME’s) is any business with less than 250 employees. There were 5.7 million SME’s in the UK in 2018, which was over 99% of all businesses.

There were around 3.4 million sole proprietorships and 1.9 million actively trading limited companies.

Out of the actively trading limited companies, just over half are employers and just under a half are one-man band businesses.

A lot of people think about starting their own business for multiple reasons – maybe they want to pursue a personal passion, be their own boss and work more flexible hours. However, once their business is finally up and running, there are many things they will need to take into account.

For example, if your business is in the B2B (business to business) sector and you want to create the right impressions with clients, then it’s always beneficial to have a new car to turn up to meetings in. A vehicle, when used for business, should reflect the image and brand of your company. In that sense, if your vehicle matches the intended customer perception of your brand, then ultimately it can make a positive impact.

Starting a new business comes with many expenses, so purchasing a new car may hardly be feasible to say the least. This is where the car leasing could be a potential option to consider.

Why car leasing may be an option for your startup company?

Car leasing is a bit like renting a car, only for a longer committed period.

For example – contracts usually last for a period between 2 and 4 years, and leasing is only available on brand-new cars. Yes, lovely and shiny brand-new cars.

Another great perk of car leasing is that it can be more cost effective and more hassle free than purchasing a car, as you can incorporate benefits such as maintenance and servicing costs into a single monthly rental.

A lease contract usually involves an upfront initial rental followed by regular monthly rentals over the duration of the lease. At the end of the contract (usually 24, 36 or 48 months although other options are available), the car would generally go back to the leasing company.

Read more: How car leasing works

What to do before applying for a lease…

For many new startup companies, getting credit lines in place can be extremely difficult, due to the fact that there is a lack of trading history for your new company. Finance companies will be looking at risk and affordability when they consider your credit application.

There are a few things you will need to have prepared before moving forward with your application. One of those things will be to have the right documentation available when you’re applying for a lease, this will improve your chances of being approved by the finance company. Some of the criteria they may require could include:

It is important to note that there are penalties for early termination of the lease with most leasing contracts, so you need to be sure that you can afford all the monthly rentals until your contract expires. Since most startups fear the uncertainty of their future and whether they can become profitable, it is important to make sure you are leasing a car that you believe you can comfortably afford. Also, the vehicles need to be returned to the leasing company at the end of contract in a condition based around the BVRLA Fair Wear and Tear Guide. Any damage or reconditioning required not considered fair wear and tear will be charged to you, along with any excess mileage charges should you exceed your previously agreed annual contracted mileage. Please also remember that leasing is a NON-OWNERSHIP scheme, where you will never own the vehicle.

View our company car leasing offers

Choose the lease you want

There are various different products available to fund your new vehicle ranging from contract hire, finance lease, lease purchase, contract purchase, hire purchase etc. It is important that you spend some time to see which scheme is best for you. If you need any advice, why not call one of the Rivervale Leasing Account Managers for a chat!

Top leasing tips for new companies

Research, research, research!

• Search online and educate yourself on how exactly business leasing works, the benefits and disadvantages, and what options are available to you.
• As business car leasing applications can be quite confusing for someone who is new to leasing, then we advise you to speak to an expert in this area, that way you find out what you need to know and avoid any complications.

Think about your budget and the cost that comes with leasing …

As a new business, you will always be mindful about what you choose to invest in and how much it will it cost. There are many additional costs you will need to consider when applying for a lease, such as:

Read more: Company car tax explained

It is also important to consider how long you will need the car for. We recommend that new businesses go for a more affordable lease over a shorter-term period as possible, let’s say 2 years, as opposed to going for a more expensive lease over a longer period. This way your business will have been in operation for a credible amount of time, meaning you can re-evaluate where your company is at and you can lease for a longer period and a more expensive vehicle second time around.

If you need any further information regarding car leasing and how it works our dedicated Account Managers are happy to help.

If you're apart of a startup company and you would like to discuss business car leasing options with an Account Manager - request a callback today.