Short Term Flexible Vehicle Leasing – How It Can Get Your Company on the Road to Success
Staff vehicles are often one of the largest expenses faced by small businesses, however, there are more car sourcing options on offer than ever before as more businesses realise the benefits that leasing can bring over purchasing.
Let’s look at the average medium sized IT Company that employs a team of 10 regional sales reps as an example. With the increased focus on staff benefits and a ‘why should I work for you?’ employment culture, they are likely to need to offer access to a company vehicle as part of the job package. However, they are even more likely to not have the funds readily available to pour into buying a fleet of brand new Volkswagen Golfs or the latest Ford Focus (a field sales favourite!).
Short term vehicle leasing can solve this problem, enabling the company to flexibly lease the quantity of cars they need in line with the amount of sales reps they employ – all with road tax, MOTs and servicing costs taken care of without the need to get involved.
So, how exactly can short term leasing help companies to access fleet cars for less? Let’s take a look at some of the ways that business car leasing could be ideal for your company.
It’s simple and it’s flexible
When it comes to short term vehicle leasing, flexibility is what makes the difference. Short term leasing offers all the same benefits to a business as traditional car leasing, but minus the long term commitments. It can be a really cost-effective way of getting your staff into vehicles with a low risk method of funding that won’t involve you pumping thousands of pounds into buying new vehicles.
With most short term leasing contracts, your supplier will give you a choice of vehicles across a wide range of vehicle groups (usually city car to luxury saloon). And then it’s simple; if your business needs change or you need to hand a car back, it can simply be exchanged for different vehicle type or given back at the end of your short term lease period (most start from a minimum of 28 days).
It allows you to know your spend
Flexible, short term business leasing means that you’ll always be ahead of the game when it comes to knowing the cost of exactly what you’re paying to keep your vehicles on the road.
A fixed monthly cost per car means that there won’t be any nasty surprises – you just pay one, fixed monthly invoice every 28 days of your contract and let your staff get on with doing their motorway miles.
It’s low risk and VAT efficient
We all know the downsides that come with forking out on a new car. As soon as you drive it off the forecourt, you lose money. That is followed by a gradual depreciation in value over the (average) four years before you change the vehicle for something new. Times that by a fleet of, say, six vehicles in your business, and that depreciation value could amount to quite a large amount of money lost.
With vehicle leasing however, you could reduce that residual value risk significantly. You don’t own the vehicle, so you don’t take the brunt of lower re-sale values, and you can simply hand the car or cars back without having to worry about whether you’re trading them in or swapping them for a newer model.
Disposal is even taken care of – most short term leasing companies will come and remove the vehicle for you, saving you time (and hassle!).
When it comes to VAT, most companies can claim back 50% of the VAT on leased vehicles, and this can increase to 100% on occasions where the vehicle is used exclusively for business use. Also, there are potential savings to be made on National Insurance contributions for companies that use leasing for small fleets of cars. As the vehicles are generally newer, they benefit from lower C02 emissions resulting in lower benefit in kind charges which result in reduced NI payments you will make for your employees.
So, if you’re looking for a way to introduce vehicles into your business without the large initial outlay and complex contracts, then maybe short term leasing could be the right road for you.