How to Get the Best Deal on a Commercial Vehicle
The high initial costs and potential maintenance and servicing bills make commercial vehicles a significant investment for all SMEs. The problem is that they’re crucial to the way modern supply chains operate so it’s essential that you’re able to finance them securely. Since buying outright or taking out risky loans can potentially damage your business, consider leasing the vehicle instead.
How Does It Work?
Leasing vehicles is very similar to renting them, except that rather than entering into a contract for just a few weeks a leasing agreement generally works over 24-60 months. You agree to a set annual mileage between 10,000-30,000 miles. Consider giving yourself some leeway when deciding your predicted mileage. Exceeding your limit typically results in a fine of between 5-15p per mile so you should consider how your schedule may change over the course of the deal.
At the end of the contract, you’ll hand the keys back over to the lender. If you would like the option of buying the vehicle, but don’t want to fully commit, many providers such as LeaseVan.co.uk allow you to instead enter into a business contract purchase. This allows you to pay for the vehicle over a set number of months at a fixed rate, but towards the end of the agreement you can decide to decline your option to buy if it is no longer financially viable for you.
What Are the Advantages?
Reclaiming VAT: When leasing a vehicle for business use you’ll be entitled to reclaim 50% of the VAT on finance and 100% on maintenance. If you can prove that there will be no private use of the vehicle, exceptions can also be made that allow you to reclaim all 100% of the necessary VAT. Take a look here to see if you qualify.
Improving Cashflow: By working on a flexible payment schedule you’ll be able to better manage your company’s cash reserves. Rather than risking a loan against your property or business, you can design a fixed-rate, monthly contract around the individual requirements of your business. The cash remaining can be used in other areas of your business such as hiring more employees or investing in improved advertising.
Leasing commercial vehicles is becoming increasingly popular across many different types of businesses in the UK. If you’d like to find out more tips on ways your business could save money, take a look here.