Business Car Leasing Explained

Business Contract Hire (BCH) is one of the most popular ways for businesses to fund company vehicles. Rather than purchasing a vehicle outright, your business leases it for an agreed period, typically between 24 and 48 months, in return for fixed monthly payments. At the end of the agreement, you simply return the vehicle, subject to the terms of your contract.

For many businesses, Business Contract Hire offers a cost-effective way to fund vehicles without tying up valuable capital. Fixed monthly payments make budgeting easier, while avoiding the concerns of vehicle depreciation and the hassle of selling vehicles when it's time to replace them.

The monthly rental is calculated using several factors, including the vehicle's price, the anticipated value at the end of the lease, the contract length and your agreed annual mileage. Choosing the right mileage allowance at the start of your agreement helps ensure your lease is tailored to your business's needs.

Depending on your business circumstances, Business Contract Hire may also provide tax and VAT advantages. VAT-registered businesses may be able to recover a proportion of the VAT on qualifying lease rentals, and maintenance packages can also offer additional VAT recovery opportunities where applicable. As tax legislation varies depending on your individual circumstances, we recommend seeking advice from your accountant or tax adviser regarding your eligibility.

Many businesses also choose to include a maintenance package within their agreement. This helps spread the cost of routine servicing, maintenance and other covered items into one predictable monthly payment, making it easier to manage vehicle running costs throughout the lease.

At the end of your agreement, you simply return the vehicle in line with the BVRLA Fair Wear & Tear Guidelines and have the flexibility to lease another new vehicle, helping your business stay on the road in reliable, modern vehicles.

Benefits of Business Car Leasing

Minimum capital expenditure

Accurate monthly budgeting

Improved cash flow

Fixed interest rates

Rentals can be offset against the businesses profits.

Reduced administration

On-going advice and support

Road Fund Licence provided (vehicle excise duty paid) for duration of contract

Optional maintenance package

Optional breakdown rescue cover

Optional replacement vehicle cover in event of breakdown

Optional GAP insurance which provides cover for the shortfall between the outstanding finance and the insurance value if the vehicle is declared a write-off by your insurance company

Disadvantages

Early termination can be expensive

If you do more miles than stated in your contract you will be charged excess mileage for each mile over that stated in your contract

You must look after the vehicle and return it in a well maintained condition otherwise you will be charged for any damage over and above that stated in the ‘Fair Wear and Tear Guide’

You must have fully comprehensive vehicle insurance

We are Balgores, based in Romford, Essex. Our team of experts have worked in the car leasing sector for decades, building relationships with manufacturers across the globe to provide drivers with incredible leasing offers on any and every car.

01708 38 44 51

Business Car Leasing Explained