Do you own a company? You may want to invest in some company cars. Knowing what your options are when it comes to vehicles is important. There are many myths when it comes to the subject matter, and so it is important to do some research before you make any serious decisions. If you rush into a contract with a company, you will find it hard to back out of that agreement. So, which is better, leasing or financing?
Why do you need company cars?
You may be wondering why you need to invest in company cars. After all, many companies get by without having a fleet of vehicles. Getting company cars for your business has a wide range of advantages. Firstly, it ensures that you present the right image for your company. If you all drive uniform vehicles, you can ensure that your employees appear professional and smart. When you send your employees out, you will not have to worry about how they present themselves. You will also find that having a company car works as an incentive for many employees. You need to ensure that your employees are loyal so that there is a level of continuity in your business. If you don’t do that, you could lose staff.
Who needs a car in your company?
Choosing who you should offer a company car to is a huge decision. You need to make sure that you trust the employees whom you give cars to so that your finances are safe. Before you decide who to give a car to, you need to think about who they see on a regular basis. For example, you need to ensure that any client-facing employees, such as your sales team, get a car. Business is all about making the right impression on people. You need to ensure that your sales team is always sending out the right message to existing and potential clients.
What is car leasing?
Car leasing is a system that allows you to loan a car from an external company. You will need to pay a monthly (or, sometimes, annual) fee to the company so that you can borrow the car from them. You can get an entire fleet of vehicles from the same car leasing company. Online leasing agencies, such as leasingoptions.uk, have a specific business plan. That means that you can pay for your entire fleet in one transaction.
What is car financing?
Car financing works a little like leasing, only you buy a car rather than loaning it. That means that you are working with the end goal of owning your fleet of vehicles. The installment plan works in a similar manner as leasing a vehicle. You will need to pay monthly or annual fees to the car finance company so that you can buy a car over a matter of years. You will also need to pay a level of tax and interest on top of your fees.
What are the benefits of car leasing?
There are many benefits of leasing a car. For example, you have a wide array of choice when you decide to lease vehicles. You can choose to end your agreement with a leasing company when you want. That in itself offers you loads of flexibility in your payment plan. If you lose an employee, you no longer have to pay for their car. Instead, you can simply end your agreement with the leasing agency. There are no negative repercussions of ending a leasing contract when you no longer need a certain vehicle. Another benefit of leasing a car is that you pay less by way of interest and tax. When a car becomes old-fashioned, you can exchange it for a new model at a small fee.
What are the benefits of car financing?
The main benefit of getting cars on finance is that you will eventually own the entire fleet of cars. It will take you several years to buy the cars. Some business people think that it will be helpful to own a lot of cars in the future. Others prefer to invest money in different areas. Each business is different. Something that makes good financial sense for one business will not work for another business. You should take the time to figure out what works for you in your business.
What are the drawbacks of car leasing?
There are few drawbacks to leasing a vehicle. One of the main things that concerns people when they lease a car is that they will never own it. It is true that when you lease a car, you are not paying to own a car; you are just paying to borrow a car. Another drawback is that you have to insure the car yourself. Often the leasing agency will have a level of insurance, but it is worth getting a policy so that you can cover any extra car expenses.
What are the drawbacks of car financing?
One of the main drawbacks of car financing is that it will cost you more than the car is worth in the long-run. Sure, after seven or eight years, you might own a car, but you will have spent enough money to buy three cars. When you buy something on a finance plan, you always pay more that you should for it. Another drawback is that you have no flexibility when it comes to exchanging your vehicle. During that seven or eight-year period, your car will begin to look old. You can’t exchange your car (or fleet of cars) for a new model without starting a new payment plan.
Summary
Unless you want to own a fleet of cars, you should consider leasing cars as a viable business move. When you weigh up the potential costs of leasing and financing a vehicle, you will see which is better. Buying cars on a finance plan will cost you much more in the long-run, than leasing a fleet of cars. You need company cars for your business, but tying yourself into buying loads of cars is a bad financial move.
