Leasing is basically a method of paying for a use of a vehicle over a specified period of time. Don’t get hiring confused with leasing as they are very different. While it is possible to hire a car for as little as X amount a day or for a few hours, leasing is typically for 24 months. Majority of contract are based on 3 X 23 meaning 3 payments deposit followed by 23 payments monthly (2 years) other contracts are available to suit your needs the longer you lease contract the cheaper the monthly payments.
Leasing companies have access to exclusive vehicle discounts due to buying bulk vehicles from a range of suppliers offering various prices for vehicles. The leasing company then sources the cheapest supplier for the vehicle, some companies aim to make large profit margins where as some go for volume by offer savings to their customers.
If an ordinary customer walked into a showroom and purchased a vehicle for £20,000 then the leasing company has access to purchase that vehicle cheaper then the ordinary customer. Once the cheapest supplier has been sourced for a vehicle then the monthly price would be calculated cover the depreciation over the term. At times manufacturers strike a deal with leasing companies to purchase X number of cars at exclusive bulk prices, this then means the leasing companies has to sell their X number of cars ASAP and therefore offer discounted rates.
So the ordinary customer is out of pocket by £20,000 and is stuck with the vehicle and if they would have leased the vehicle they would only be paying the depreciation monthly and hand the vehicle back after the contract has ended, not having to worry about reselling the vehicle.
It should now be clear to see now if you have you business head on that why should I have £1,000’s tied up in a vehicle when you can keep you cash flow healthy and pay the minimal depreciation on a vehicle. So with that £20,000 not tied up in a vehicle you can invest that money elsewhere. All lease vehicles from our selves also come with manufacturer’s warranty, so there’s peace of mind.
For a VAT registered business leasing a vehicle is ideal, due to a number of reasons. When a vehicle is leased on a business it is seen as an expense, this means that instead of paying the tax man the good round sum you can lease a vehicle out of it, also VAT can be claimed back 100% on a commercial vehicle or 50% on a car.
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