Trying to get your head around leasing on a whole is actually a bit of a struggle, but once you understand – it’s actually really easy. Basically, leasing is just the long term hire of a car in which you can either swap, return or buy the car at the end of the contract. It’s also seen as a more stable way of having a car.
One party grants the right to use the car for a certain amount of time in exchange for fixed monthly payments, for example you would pay £150 each month over a 36-month contract. Business leasing is perfect for those who want to make their business have that ‘executive’ look which can be updated every couple of years, depending on your contract length.
Which options are available? 1. Business Contract Hire (BCH) With a Business Contract Hire you get to choose the car you want and choose the length of time you’d like to drive it for. Once your contract is over, you return it to the leasing company.
Advantages - Maintenance can be covered - Fixed monthly payments - VAT benefits - No depreciation worries - Flexible contracts
2. Business Contract Purchase (BCP) This option is ideal if you’re looking to eventually become the owner of the car you’re leasing. You pay the fixed monthly payments over a certain period of time in which a balloon payment is available to pay at the end, in which the car then becomes yours. At the end of the contract you can either return the car, buy the car or part exchange the car.
Advantages - Range of different options to choose from - Low/zero deposit is needed - Low monthly payments - Depreciation isn’t a problem - Contract lengths differ
3. Hire Purchase A balloon payment doesn’t seem to attractive when it comes to a leasing deal in which you own the car at the end. With a Hire Purchase, you get to own the car without having to pay a large amount of money. Instead, you pay a couple of the monthly fees and the car then becomes yours.
Advantages - You eventually own the car - Monthly payments are lower than BCP - No additional costs, so if you go over your miles or damage the car it just decreases the value - Fixed monthly costs
4. Lease Purchase This option is pretty similar to the BCP in which the leasing company find the value of the car which will be added to the balloon payment which is paid at the end. The balloon payment can be paid in cash, financing the outstanding balance or you can exchange in order to pay the remains off.
Advantages - Lower monthly payments than a hire purchase - Ownership at the end of the contract - Contracts are flexible
There are a range of lease cars which suit the role of a business car perfectly from the likes of Mercedes, Audi and BMW. You can also opt for a van lease if your job is a lot more practical and involves carrying large objects daily.