What Differentiates Business Car Lease from Personal Car Lease?

Peruse any car leasing company or even car leasing deals broker’s website and you will instantly be struck by the polarity in the monthly lease prices of business car lease deals and personal car lease deals. You cannot help but wonder why business car lease prices are always tend to be a tad lower than personal car lease prices. Another question looms – does it make sense to opt for a business car leasing arrangement rather than a personal one?

Well, the primary difference between business and personal car lease prices arises due to the VAT component. Generally speaking, personal car leasing deals are always advertized inclusive of VAT while the business car leasing deals are exclusive of VAT.

Now why is this so? Well, this is because currently as per the UK law, tax arrangements vary for personal and business car lessees. Today, Vat registered business users can reclaim about 50% of the VAT payable on each contract hire payment. This is when the leased car is used for both business and social use. And if the car is being used entirely for business use, you can even enjoy a reclaim of the full 100% of monthly VAT charges on the lease rental price. Additionally, if you opt for a car lease maintenance contract, you can even reclaim 100% of the VAT payable thereon, irrespective of how the car is used.

Therefore, business owners benefit not just from the low down payment and lower monthly rentals (when compared to outright purchase) on car lease deals, but can also write off the VAT charges, thus lowering their expenses further.

On the other hand, personal car lease users do not get to enjoy any reclaim on the VAT payable. They have to bear the full amount every month including VAT charges.

Apart from being cost effective, another advantage that business owners have going for them is that as they never technically own a leased car, it will not figure on their balance sheet. The monthly lease payments are only classified as a business expense. Therefore, the company’s debt liability gets reduced, which in turn helps to improve your corporate credit rating!

Going ahead, it is obvious that a business will not lease just one car and leave it at that. Most companies maintain a fleet of cars to service their clients, top employees and other business purposes. Managing the day to day running and maintenance of the fleet can prove cumbersome. But as a business owner you don’t have to fret as car leasing companies even provide additional fleet management support services that will save you both time and money.

So, when it comes to car leasing, business car leasing proves more cost effective than personal car leasing. But if you require a car only for personal use, do not worry as many car leasing companies extend their business lease deals to personal users as well!

Author’s Bio: This article is written by Brad Carlton about the car lease deals. Peruse any car leasing company or even car leasing deals broker’s website and you will instantly be struck by the polarity in the monthly lease prices of business car lease deals and personal car lease deals.

Sponsor Ads

• Ad Space Available - Rent it Now!

Report this Page

Created on Dec 31st 1969 18:00. Viewed 0 times.

Share on APSense

Comments