There are advantages and disadvantages of company car finance companies with both solutions, depending on your business’s requirements.
To help you understand the differences and to decide which option is the most appropriate for your business, we’ve put together this informative guide
Buying a Company Car
Buying a car, whether outright or through instalments, means you will be paying the whole cost of the vehicle up-front. Whilst this cost is inevitably higher, it will lead to the eventual ownership of the vehicle.
Once the vehicle has been purchased it’s also worth remembering that your business will need to pay for any maintenance or repair costs, should they arise.
Buying a company car can often be a choice for non-VAT-registered businesses given that VAT-registered companies must pay the VAT upfront upon purchase. At 20% of the value of the vehicle’s total cost, this can be an expensive undertaking.
The cost of buying a company car does not have to be high, and your company has the benefit of owning the asset at the end of the term. If your business is looking to keep the vehicle for a longer term then buying the vehicle might present a better option.
Leasing a Company Car
Leasing a car means a business will use the vehicle for a fixed amount of time whilst paying monthly instalments. This can make having company cars a manageable and predictable undertaking.
This option also has VAT advantages. You can recover 50% VAT on the vehicle and 100% on maintenance costs—perfect for VAT-registered businesses.
Be mindful of specific clauses like mileage limits and early termination fees. Ignoring these can be costly, so always read the small print.
Company car finance providers like White Oak UK can help you find the right vehicle for your business. They offer local knowledge and sector expertise for tailored finance solutions. Learn more about Asset Finance to spread the cost of an asset over its life.
For more information or to discuss your needs, please contact us.
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