Business Car Leasing Explained
What is business leasing?
Business leasing essentially means renting a vehicle for an agreed amount of time and mileage for a fixed fee. If you are sourcing vehicles for a growing business, business leasing can be a far more cost-effective option than purchasing outright.
Depending on your situation, there are many business leasing products to choose from, and each comes with a different set of benefits and considerations for your business.
In particular, be mindful of contractual stipulations with the potential to lead to extra charges, such as excess mileage, vehicle condition on return (outside the BVRLA Fair Wear and Tear conditions), and early termination.
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What are the key benefits of business leasing?
What are some popular business leasing solutions?
Leasing Frequently Asked Questions
No, car leasing does not automatically come with insurance. When you lease a car, it's your responsibility to secure your own insurance policy that meets the minimum coverage requirements set by the leasing company or your employer. They will require you to maintain a specific level of liability, collision, and comprehensive coverage on the leased vehicle throughout the entire lease term.
Leasing a car means you're essentially renting the vehicle from the leasing company for a predetermined period and mileage, all for a fixed monthly fee for the duration of the lease. Typically, a lease lasts between 2 to 4 years.
Instead of purchasing the car outright, you make monthly payments to the leasing company for the use of the vehicle. At the end of the lease, you can choose to return the car, buy it, or lease a new vehicle.
The cost to lease a car can vary significantly depending on factors like:
- The make, model, and trim level of the vehicle
- The length of the lease term (24, 36, 48 months, etc.)
- Your credit score and history
- The amount of the first rental payment
- Annual mileage allowance and excess fees
- Taxes and fees
To get a business car lease, you'll typically need to:
- Decide what kind of vehicle your business needs and set a budget.
- Research leasing companies that offer finance for businesses. Get pre-approved for financing and provide any required business documents.
- Negotiate the lease terms like the monthly payment, mileage limits, and end-of-lease options.
- Sign the lease agreement and pay any necessary initial payments or fees.
Car leasing works as follows:
- You select the vehicle you want to lease and negotiate the terms with the dealer or leasing company.
- You make an initial payment, which is typically 1-3 months' worth of lease payments.
- You make fixed monthly payments for the duration of your lease agreement.
Further guidance: going electric
Because of the regulatory and tax advantages they offer, electric vehicles are becoming increasingly popular for business fleets. Should you go electric too?
Fleet Funding from Alphabet
We offer a wide range of business fleet finance options – let’s find the one that works for you.
Understanding fair wear and tear
Review the BVRLA's industry-standard definition for what constitutes deterioration to a vehicle caused by normal usage.
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