If you are looking to purchase a company vehicle there are two options to consider, whether to buy the vehicle or to lease it. There are advantages and disadvantages with both solutions, depending on your businesses requirements.
To help you understand the differences and to decide which option is the most appropriate for your business, we’ve put together this informative guide
Buying a Company Car
Buying a car, whether outright or through instalments, means you will be paying the whole cost of the vehicle up-front. Whilst this cost is inevitably higher, it will lead to the eventual ownership of the vehicle.
Once the vehicle has been purchased it’s also worth remembering that your business will need to pay for any maintenance or repair costs, should they arise.
Buying a company car can often be an alternative choice for non-VAT registered businesses given that VAT registered companies must pay the VAT upfront upon purchase. At 20% of the value of the vehicles total cost, this can be an expensive undertaking.
The cost of buying a company car does not have to be high, and your company has the benefit of owning the asset at the end of the term. If your business is looking to keep the vehicle for a longer term then buying the vehicle might present a better option.
Leasing a Company Car
Leasing a car means a business will use the vehicle for a fixed amount of time whilst paying monthly instalments. This can make having company cars a manageable and predictable undertaking.
The charges for maintenance and repairs will also be a fixed amount meaning you’re aware of how much you are paying each month.
There are also VAT advantages to this option with VAT recoverable at 50% on the supply of the vehicle, and at 100% for the maintenance costs - ideal for all VAT registered businesses.
The agreement you make with the car lessor can be tailored to include add-ons such as full maintenance and the Road Fund Licence (Car Tax). Leasing a car is true ‘fixed price motoring’ as there are no hidden costs down the line.
Specific clauses in the agreement can prove costly to ignore, such as mileage limits and early termination clauses – so don’t forget to read the small print.
Leasing a car will not leave you with an asset at the end of the agreement, but there is no risk of being left with a negative equity on the vehicle, as can happen with a purchased vehicle.
White Oak UK can assist with helping you find the most appropriate vehicle solution to support your businesses requirements. We will search key market providers quickly to find you the most competitive leasing or purchase deal available.
For more information or to discuss your requirements, please contact the vehicles team on 0330 058 0836 or you can request a call back here.