What business car leasing involves
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Business car leasing is a good way of spreading your costs and keeping a hefty single payment off your books.
Your bank manager is much more likely to look favourably upon you if you opt to go down the leasing route rather than buying a car for your business.
Car leasing suggests a long-term approach to the company and shows that you have some restraint when you are spending for your business.
Car leasing often involves a service and breakdown contract, so it can be a good way of ensuring that you are always mobile.
Business car leasing is normally on a two plus one month basis. Your initial payment constitutes the equivalent of three months hire charge (two months are held as deposit, the third is your hire payment for the first month) plus a documentation fee of between £100 and £200.
Once you then accept delivery of the vehicle, you then have nine additional monthly payments to make (on a one-year lease, 33 on a three-year lease, etc). At the end of the lease period, you can usually 'carry forward' the deposit to your next leased vehicle.
Monthly leasing payments normally include; full maintenance, this covers all routine maintenance, such as servicing, tyres and exhausts; roadside assistance, normally with one of the bigger organisations like the AA or RAC and yearly vehicle excise duty.
On top of this there may be some sort of accident management service which means someone else deals with the aftermath of an accident and normally includes replacement cars and some sort of expenses for any inconvenience.
Additional services can include things like a freephone line to book your service, check networks of approved garages, arrange collects or returns, and sort out courtesy cars and legal helplines for legal advice on motoring and travel problems across the European Union.
Payments also cover vehicle customising for company livery, installing mobile telephones, tracking systems, alarms and hi-fi systems as well as fuel cards to manage your fuel bills.
During the period of the lease you will also be responsible for insuring the vehicle.
The insurance must be fully comprehensive, and the leasing company will want a copy of your insurance policy.
Bear in mind that although you can lease a top of the range BMW for a lot less than it would cost you to buy it, you'll still have to pay the insurance at the going rate.
So if you're starting a company and you've only just passed your test then an Audi TT at £300 a month may look like a bargain but the additional £200 a month insurance will bring you back to earth. Some car leasing companies offer you the option of a new or nearly new car to lease.
The choice you should make really depends on the type of car. Fleet cars such as the Mondeo, Vectra, Omega etc lose their value quickly early on in their life and therefore there are large savings to be made by choosing nearly new.
If on the other hand you are looking for cars such as BMW, VW, Audi, Mercedes etc which have much lower depreciation, then when the leasors purchasing discount is taken into account 'nearly new rates' will be much closer to new and therefore generally new vehicles will represent better value.
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