Car Audio

Posts Tagged ‘lease cars’

I have just begun a new job and feel that the time is right for me to be looking into buying a new car. In all truth I have owned my Fiat Punto for well over 6 years now, and although she has been brilliant, she is looking a bit old and battered.

My biggest predicament is which car should I think about investing in?

There are a lot of cars on the market now and my concern is if I make the wrong choice, I could be stuck with a car for the next 6 or 7 years.

A friend of mine suggested that it might be a good idea to look at leasing a car for a few years. My first thoughts were that this would work out too expensive and I should just buy a car outright.

I decided to carry out some searches and get all the facts and figures together so I could see what sort of deals were showing up for Cheap Lease Cars.

I will admit that I was very surprised by the really competitive deals on offer, but still totally undecided about which car to choose.

My first vehicle was a Vauxhall Nova, so I thought that probably looking into Vauxhall Contract Hire would be an ideal place to start.

Although Vauxhall has some brilliant models available, I was thinking about leasing a car more in line with my new company status.

My partner bought a Toyota Avensis and he is very happy with this model. He has found his car to be very dependable with no problems. With this in mind I decided to carry out a search into Toyota Contract Hire and I was suitably impressed by the Toyota Landcruiser. The Landcruiser seems like a tremendous motor, big enough for the family, lots of room for the weekly shopping and it will certainly look great in the car park.

I think the Landcruiser will suit me very well for the next 3 years. What is brilliant is that at the end of the 3 year lease, I can buy the car.

Most businesses pay for their cars and vans either by outright purchase or by some sort of leasing contract. There are pros and cons to each approach.

Outright Purchase

The main advantage of outright purchase is ownership. When the vehicle is paid for it belongs to you (the company). This will enable your company to sell the vehicles in order to retrieve some of the money spent.

The key disadvantage of outright purchase for most companies is that you must pay the full cost of the vehicle, either as a one-off lump sum or spread over an agreed period. This can mean that you must bear some significant expense especially if your company operates a fleet of vehicles. Finding enough funds to purchase vehicles outright can cause businesses some unwanted cash flow problems.

Other expenses that will need to be covered include all maintenance costs, which can be covered by paying maintenance charges to the manufacturer, along with insurance and breakdown cover.

Company Car and Van Leasing

The key advantages of company car leasing to business are the benefits it brings to cash flow. Initial down payments on comapny car leasing deals is usually very low and the monthly payments are generally very affordable. This is why leasing is so popular with company accoutants. Knowing how much transports costs are from month to month makes budgeting and financial planning so much simpler.

Also, most reputable leasing companies will offer to include the cost of all maintenance in the leasing contract. They may even ofer to include broken windscreen cover and replacement tyres.

Although car insurance is not normally included in the lease contract it is often offered by the leasing company as an optional extra which, if accepted, is generally cheaper than it would be if purchased separately.

One of the key disadvantages of leasing is that the car or van never actually belongs to your business. But many would see this as an advantage as it means that your business need never be concerned with disposing of the vehicles.

Another disadvantage is that the government considers a company car as benefit in kind which makes it taxable and that tax is derived from the driver. A higher rate of taxation now applies to company cars since recent changes to the UK tax laws. However there is a tax advantage to the business who can claim for the car as a capital cost and offset this against profits.

Clearly there are many factors to bear in mind when a company is considering either to lease vans and cars or to purchase them outright. There is currently so much competitionn for business amongst car leasing firms that shopping around is likely to give you a particularly good deal. Many vehicle leasing firms will give you free breakdown cover and offer flexible mileage plans to entice your business. The best approach is to do your research, take advantage of the various online quotation systems and don’t grab the first car leasing deal that comes your way.

From April 2009 it has been announced that there are new rules regarding tax relief on business cars. This could make quite a difference to the capital allowances so it may be a lot more practical to change your car sooner than you had anticipated.

This Pre-Budget report details allowances for cars are based on the vehicles co2 emissions. The ones mainly affected will be those acquired after the 31st March 2009 for companies and for sole traders and partnerships this will apply after 5th April 09.

After April it will only be cars with co2 emissions that are up to 160g/km that will attract allowances at just 10%. Therefore buy a car prior to April and keep the higher rate of relief.

It is thought that even the more upmarket cars with emissions up to 160 g/km may be a better proposition to buy now. At the present time if you are contemplating buying a car which costs more than £12,000 writing down allowances will be compressed to £3,000 a year. You are entitled to a balancing allowance when getting rid of it. Ultimately the entire capital cost of the car is allowed for tax in its lifetime.

These new rules will take away the £3,000 limit plus the allowance. In the case of the expensive car which normally loses its value far quicker than the rate of capital allowances, this will mean that there could well be a shortfall in allowances as in comparison to the cost of the car in its lifetime.

Under these new rules it appears that businesses that lease cars that are expensive should indeed benefit. The limit on tax relief on lease rentals for cars exceeding £12,000 will be replaced by 15% disallowance of lease rental payments on vehicles with co2 emissions that are above 160g/km. This will be regardless of their cost.