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Business car leasing

✅ Find car leasing options for your business

A lot of business owners choose leasing over outright car ownership because it offers cost savings, flexibility and access to the latest models and technology. This guide covers everything you need to know about leasing a car through your business.
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What is business car leasing?

Car leasing is a flexible and cost-effective option for a business that needs access to a car, but doesn’t necessarily want the responsibility of owning it. 

Your business rents a car for an agreed period, typically ranging from 1 to 5 years. Instead of purchasing the car outright, you’ll make fixed monthly repayments to a lender. At the end of the lease term, your business returns the car, and has the option to lease a new one. 

This allows you to use the car for your business needs, without tying up a significant amount of capital or committing to the responsibilities of ownership, such as maintenance and depreciation. It can offer your business flexibility, predictable costs, and the opportunity to upgrade to newer models more frequently.

How does business car leasing work?

Here’s a step-by-step overview of how business car leasing works: 

  1. Choose the car you need for your business. It’s important to consider factors like what you’ll use the car for as well as your make and model preferences.
  2. Search for funding with Capitalise. Once you fill in the questionnaire, you’ll receive dedicated support from a funding specialist who’ll match you with lenders most suited to your needs. Once ready, your application will be sent to your preferred car leasing provider(s).
  3. If approved, you’ll enter into a leasing agreement with a lender and receive the car.  The agreement will specify all details, such as the lease duration and maximum annual mileage.
  4. You’ll make fixed monthly payments to the leasing provider.
  5. Depending on your business’ circumstances and the lease agreement, you’ll have the following options at the end of the lease:
  • Return the car in good condition and within the mileage limit.
  • Renew the lease for another term with the same or a different car.
  • Purchase the leased car at a pre-agreed residual value.

Why lease a car through your business?

Flexible solutions tailored to your needs

With options ranging from short-term contracts to long-term agreements, you have the freedom to choose the duration and terms that best suit your business goals.

Predictable costs and financial benefits

By spreading the cost of vehicle usage over fixed monthly payments, leasing eliminates the unpredictability of maintenance expenses and depreciation associated with ownership.

Access to the latest technology and features

Your business can access the latest car models equipped with advanced technology and features, enhancing both driver experience and operational efficiency.

Finding the right business car leasing provider

At Capitalise, we work with 100+ lenders meaning that your business can access a range of different car leasing providers from one platform. Once you start your application, your dedicated funding specialist will work closely with you to understand your business needs and help you find a business car leasing provider that works for you. 

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Pros and cons of business car leasing

Pros

  • Leasing a car requires a smaller upfront payment compared to purchasing, making it more accessible if you have limited capital.
  • With fixed monthly payments, you can budget more effectively as you know the exact cost of leasing the car. This helps with future planning and cash flow management.
  • Leasing allows you to drive newer cars with the latest features and technology. This can provide a professional image for your business and potentially improve efficiency or safety.
  • Many car lease agreements include maintenance packages, alleviating the burden of servicing and repairs.
  • Some tax deductions are available if the car is solely used for business purposes.
  • There are many lenders that don’t require your business to have been trading for a specific amount of time, making it an accessible option for startups. 

Cons

  • When you lease a car, you don’t own it, which means you’ll have to return it at the end of the term.This means you won’t have an asset to sell or trade in for value.
  • Lease agreements often have mileage limits and exceeding these limits can result in additional charges. If your business requires extensive travel or has high mileage needs, leasing might not be the most suitable option.
  • Terminating the lease early might involve penalty fees. If your business needs change unexpectedly, you may face difficulties in ending the lease without a payment. 
  • When returning the leased car, you may be responsible for any excess wear and tear beyond normal usage. It’s important to maintain the vehicle to avoid additional charges.
  • Lease agreements usually have restrictions on car modifications or customisation, so it may not be suitable if personalisation is important for your business branding. 

Are there different types of business car leasing?

There are two different types of car leasing: a finance lease or an operating lease. 

In a finance lease, the leasing company purchases the car on behalf of your business and will lease it back to you for an agreed period. At the end of the lease term, you may have the option to purchase the car for a predetermined price.

An operating lease is a shorter-term arrangement where your business leases the car for a fixed period. At the end of the lease term, the car is returned to the leasing company. Operating leases often include maintenance and servicing as part of the agreement.

Are there any tax benefits associated with leasing a car through my business?

If you lease a car for your business, you won't own it. But you can still claim the monthly rental fees which can help you save money on your Corporation Tax. 

Historically, you couldn’t claim capital allowances on a leased car or vehicle – only cars purchased outright or through hire purchase were eligible for a 100% tax relief in the first year. However, in the Spring Budget 2024, it was announced that full expensing would be extended to leased vehicles. Legislation is yet to be published for this, so it’s important to consult with your accountant to check the current rules and regulations that may apply. 

If you opt to lease an electric company car, you may also be able to access government schemes and incentives, such as the Workplace Charging Scheme, which would lower the cost.

How to lease a car through your business

Here are some tips for leasing a car through your business: 

1. Choose a vehicle your business can afford 
When you’re considering car leasing, choose a car you can comfortably afford so that it doesn’t hurt your business’ cash flow. Considering factors such as the age and make of the car will help to find one that fits within your budget. 

2. Have a good business credit score
Your business credit score plays a part in the lender’s decision to offer you car leasing. Having a good credit score means that you’ll be able to access better lease terms and lower interest rates, making it more affordable for your business. 

3. Prepare your documents
When applying for business car leasing, you’ll need to have documentation ready as part of your application. Having your last set of filed accounts, business bank statements and basic personal information (such as your address and date of birth) will help to make the process of getting a car quicker and easier. 

4. Proper car maintenance
By making sure your car stays in good condition, you can reduce repair costs and maximise the lifespan. This will also help to avoid penalties or additional charges at the end of the lease term.

5. Optimise the lease term 
Determine the ideal lease term based on your business requirements. If you need the car for a shorter period, consider a short term lease to avoid long term commitments. Or, if you anticipate a longer term need, negotiating an extended lease could help you secure better rates.

Search for business car leasing with Capitalise and compare your options from our panel of lenders

frequently asked questions about business car leasing

Ending a business car lease early typically comes with penalties, as the lender expects a certain stream of payments over the entire term. However, some lease agreements might have options for early termination, often with associated fees.

Customisation is generally discouraged, as you're expected to return the vehicle in good condition. Any modifications that reduce the vehicle's value or require restoration can result in additional charges.

At the end of the lease, you have several options: you can return the vehicle, purchase it at the predetermined residual value, or sometimes extend the lease. Be prepared for any excess mileage or wear-and-tear charges if applicable.

You’re generally required to have comprehensive insurance that covers the leasing company's interests. The leasing agreement will specify the insurance requirements.

There are many different types of vehicle finance available, so you’ll likely be able to find a provider to lease other vehicles, such as a van or a truck.