However, there are large risks - financially and operationally - associated with owning company vehicles, assuming, of course, the necessary capital is available to make the purchase.
An alternative is to lease vehicles from one of the many leasing firms nationwide. Although it may initially appear unwise to pump cash into something you won't own, there are many advantages to managing a fleet in this way. However, any company planning to do business in this way must first consider all the options available to ensure they maximise all available business benefits.
Leasing a car means spreading costs through fixed monthly payments for a fixed period of time with a smaller impact on cash flow, resulting in manageable and consistent accounting. Car lease firms buy their vehicles in bulk and can therefore pass the savings onto their custom.
Be careful when anticipating mileage as exceeding this will result in an excess mileage charge
Before signing up, it's good business sense to be aware of potential small print clauses that may impact the business and those important finances.
Insurance - The business may still have the responsibility of insuring the vehicle, which will effect the choice of car: the image associated with a prestige vehicle may not be worth crippling insurance costs.
Documentation fee - There is sometimes a documentation fee to be paid prior to commencing the lease. More often than not these are just means for the lease company to increase profits, so ensure your company does not pay this charge.
Excess Mileage Fee - Be careful when anticipating mileage as exceeding this will result in an excess mileage charge at the end of the lease period. If you anticipate a breach, contact the lease company to renegotiate - it'll save money in the long-run.
Early Termination Fee - If your company's requirement for a car ceases then it can be costly to terminate the lease. Some firms charge as much as all the remaining payments as well as a termination fee, so it is worth reading the small print of the contract.
Damage and excessive wear and tear - It pays to take good care of any vehicle, , as any damage or excessive wear and tear will come at a cost when the lease ends.
Retail Price Tax - If the retail price of the vehicle is over £12,000 then a permanent tax disallowance applies. This increases as the retail price increases, meaning that at a certain point leasing may not be the most viable option financially.
Modification Clauses - If modifications are performed on the car, such as a new stereo or a company livery, then the customer will have to pay for the costs required to return the car to its original state.
