Car loans have long been a thing of the past, and a more convenient way for small businesses to buy cars has entered the economy: leasing. We explain what it is and why it is more profitable than a loan.
In recent years, credit car hire companies have become firmly established in the UK business model, but the general public still does not know exactly how the leasing system works: how transparent it is, how it differs from a loan, and how justified it is.
Whereas a bank loan used to be the only way to buy a car for your business, whether it was a shop or a home bakery, leasing a car on a long-term basis with the possibility of buying it back later at its residual value is now more attractive. It is a rental agreement that allows entrepreneurs to use cars without too many financial constraints.
What do I need to rent a car?
The documentation required to rent a car or specialized equipment is not very extensive. The owner of a private company or legal entity must provide an original passport, an application form and an electronic bank statement to credit hire cars with a subsequent buy-back.
The schedule of leasing payments can take into account the seasonality of the business and, in addition, customers benefit from pleasant bonuses – 20% VAT refund, state subsidies and discounts from car manufacturers,” explains Olga Enova, General Director of Alfa-Leasing. Group.
“Many car manufacturers offer their own discounts, up to 20%, if the car is purchased on lease. Submitting an application and all the paperwork is done electronically in our company. We don’t charge commission or force services, and our customers get maximum tax benefits,” says Jenkowa.
Not only a large fleet of taxis, but in principle any individual entrepreneur, even if the company has been in existence for less than six months and is engaged in balloon delivery, can take advantage of the system to obtain a car or truck. as a special equipment lease.
“If the legal entity or individual entrepreneur has been in existence for less than six months, we simply ask you to provide a guarantor for the company,” adds the leasing company manager.
What kind of car can I rent?
Any new car, truck, or special vehicle can be rented from an official dealer. Alfa Leasing, for example, has an electronic catalog for choosing a car. You can also ask the organization’s manager to help you choose a vehicle, obtain references and financing from partner dealerships, free of charge.
Another important detail is that the leased car appears on the company’s balance sheet and payments are not recorded in your credit history. The customer registers the car with the traffic police, but the leasing company’s managers do it for extra money, this service has been offered for a long time.
Is it expensive at all?
Unlike a loan, leasing a car is cheaper because of the lower initial payment, called the entry threshold. This is possible because leasing is generally a less risky financial product than a loan.
