Accelerate your business with commercial vehicle leasing

12 May 2024

Choosing between leasing and owning commercial vehicles? Find out how your business can optimise travel costs with a commercial vehicle lease.

commercial vehicle leasing hire finance

Cost-efficient company travel requires clever expense management. Commercial vehicle leases offer an attractive opportunity for businesses like yours to optimise travel costs. A recent Fleet News report revealed that the UK’s largest contract hire and leasing companies are “collectively funding more cars and vans than ever before.”

Here are the benefits (and the risks!) of commercial vehicle leasing for your business. 

What is commercial vehicle leasing?

Commercial vehicle leasing refers to renting a vehicle for business purposes. 

The lease period can range from a few months to several years, depending on the needs of your business and the lease’s terms of agreement. In exchange, your business makes a regular payment to a car dealership or leasing company while using the vehicle. 

This type of leasing agreement allows the leasing company to retain ownership of the vehicle. Likewise, your business can gain access to vehicles without needing to invest in long-term vehicle ownership. 

How can commercial vehicle leasing benefit your business?

Commercial vehicle leasing offers your business a convenient and cost-effective solution for company transportation. For small businesses especially, commercial vehicle leases enable you to avoid many of the responsibilities and risks associated with vehicle ownership. 

The benefits of a commercial vehicle lease for your business include: 

  • Lower upfront costs: Leasing often requires a lower initial payment compared to purchasing a vehicle outright, making it more accessible for small businesses or startups with limited working capital. Plus, a fixed lease allows you to budget more accurately for transportation expenses. 

  • Flexibility: Leasing allows you to upgrade to newer vehicles more frequently. At the end of a lease, you can simply return the leased vehicle and lease a newer version with fewer miles. In turn, you can maintain a reliable fleet without the hassle of selling and replacing vehicles.

  • Tax benefits: In the UK, there are several tax advantages to gain from leasing a commercial vehicle. For example, you can reclaim a portion of the VAT on car lease payments if your business is a VAT-registered company. 

The risks of commercial vehicle leasing

Although beneficial, commercial vehicle leasing can still present risks.

Mileage restrictions imposed by leasing companies can often come with hefty penalties should you exceed the set mileage limits. Additionally, though you do not own the vehicle, you still hold the financial responsibilities of insurance, repairs, and maintenance when leasing. 

It’s also vital to consider your long-term needs as a company and whether or not a lease matches your financial outlook. The risk of becoming locked into a lease that your business can no longer afford is a critical factor to consider before agreeing to any leasing terms. 

Funding Options by Tide helps you finance your commercial vehicle lease

For your growing business, borrowing from a trusted lender can help you optimise your finances. 

At Funding Options by Tide, we help you connect with 120+ lenders across the UK. Lending products like working capital finance and asset finance ensure your business has the financial flexibility to handle the added expense of a commercial vehicle lease.

Get started with Funding Options by Tide to discover your borrowing possibilities. 

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business and personal credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

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Funding Options

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