WHAT is Business Car Leasing? Generally it’s a set price for a set period of time. At the end of the contract period, you simply give the car back – job done.
Business Car Leasing has many advantages for small businesses although it depends on the company’s financial circumstances and the specific requirements of the business.
What should be considered with a Business Car Lease?
It can protect your business from depreciating assets, new cars being a classic example. Rather than buying company cars, a lease arrangement can help smooth the cost of motoring.
A monthly figure is set period of time, which is much easier to budget into the business finances. Choose from 24, 36 or 48 months, set your mileage allowance (from 8,000 per year), upfront deposit (3-6 monthly rental payments) and consider an optional maintenance plan.
Finally, when it’s time to return the car at the end of the contract period, the vehicle’s actual value is not your problem, and neither is selling it.
Leasing is a much smaller financial commitment than buying a vehicle, allowing you to invest your finances into the business and improve cash flow.
In effect, Business Car Leasing acts like an extra line of credit, freeing up money that would otherwise have to be put into financing your business motoring needs.
There are many leasing companies vying for your custom. This is good for you, the customer, since it puts you in the best position to negotiate a good deal.
Decide on your budget and the car make and model that suits your requirements, then use this as the basis for shopping around for the best prices.
Don’t forget to negotiate hard for optional extras too –upgrade specifications, roadside assistance, maintenance plans, insurance discounts etc.
Make sure you find a proactive company with great customer service and remember: they need you more than you need them.
What are the tax implications?
Business Car Leasing is subject to VAT and as a VAT registered business you’ll be able to claim half of this back, which could make a significant impact on monthly payments.
If your company car use is solely for business, such as in the case of a pool car with no private use, a 100% VAT back claim is permissible. In reality, though, most company cars include an element of private use, which would void the claim.
If you take out a maintenance plan in addition to the monthly business car rental, it is possible to claim all the VAT back on just the maintenance part.
What are the hidden costs?
Leasing may seem like a smart financial move for your company, but it is important to take a closer look at what you are paying for. Usually, leasing a car will involve limitations and restrictions.
A mileage limitation will determine how far you can travel during the lease period; often these are not realistic and you face a heavy penalty if you go over, or alternatively the monthly repayments skyrocket if you increase the limit.
Other possible fees include early termination charges, closing costs and vehicle destination and acquisition fees.
Watch out for protection products, such as windshield protection and maintenance plans, which are extortionate and cost much more than it would cost to repair yourself.
With a convincing salesman and complex contracts that use terms like net capitalised and residual value; it can be difficult to negotiate and understand exactly what you are getting and how much it is costing you.
Over the past year, support for the customer is what companies look for when seeking business leases for their fleet.
During the past year the Covid 19 pandemic has thrown up many challenges and its support for businesses is what made Ogilvie Fleet stand out in this year’s Business Motoring Awards.
In March 2020 (Lockdown 1.0) Ogilvie contacted all customers to say that ‘unless you tell us otherwise, we will not take your April direct debit’.
The business also gave anyone who requested a three-month payment holiday which equated to around half of its client base. With those who requested a payment holiday, Ogilvie worked out a payment plan with them once they started paying again in July.
Another innovative initiative to support its customer during the pandemic saw the business work closely with its clients to reassess their vehicle mileage expectations/requirements.
This resulted in reductions in rental fees for many clients – a lifeline for many SMEs. Highly responsive to client feedback and developments within the market, Ogilvie Fleet has taken the number one spot seven times in the past eight years in ExpertEye FleetEye’s Customer Service Index (CSI).
Scores are collated in four key areas of account management, management of fleet, driver satisfaction and overall satisfaction, for which Ogilvie Fleet has scored a minimum of 4.7 out of five in every category for five years.
For the past five years, Ogilvie Fleet has also run its TouchPoint company car and van driver survey which asks drivers to rate Ogilvie Fleet on key areas including vehicle ordering and delivery.
The Ogilvie True Cost (OTC) matrix and Fleet Management Reporting Software are just two examples of how the company supports clients – specifically SMEs – by educating and adapting to change.
For example, the new OTC calculation for Electric Vehicles starts by calculating key information such as electric range, battery capacity and the cost of charging. It then includes the critical costs associated with National Insurance Contributions and then applies the relevant corporation tax savings to actual and direct fleet costs before adding back in any applicable lease rental restriction.
This builds up an extensive picture of each company vehicle enabling companies to make the best possible decision for their businesses. Meanwhile, the Fleet Management Reporting Software provides concise, top line information to make it easier for users when compiling reports for senior management. Recent additions include accident management data, in depth fines analysis and legacy data for applicable clients.
Ogilvie provides access to a host of online tools such as fuel benefit and tax calculators, as well as its Happy Drivers App – designed to support fleet managers and drivers’ day-to-day functions. Downloaded by 15,000 drivers to date the latest release now sees the addition of EV charge point finder map. Specifically, for Ogilvie Fleet drivers the App also provides emergency contacts, as well as a host of driver services such as access to vehicle servicing, MOTs and tyres all supported by the support team.
In 2020 Ogilvie Fleet also launched Appraisal – a new, free to use online process to make end of contract appraisals easy and quick. Designed for use on mobile devices, the system allows drivers to report detailed information to Ogilvie’s fleet disposal team about a vehicle prior to its return, including images and videos.
To find out more about Ogilvie Fleet click here