Personal Car Leasing VS Business Car Leasing

Business Car leasing and Personal Car Leasing are very similar at a glance but there are definitely a few things that are worth considering if you are in a position to take advantage of either of the options:

Business contract hire, or a business lease, is essentially where a business will rent a vehicle or indeed multiple, via a monthly finance contract with a minimum down payment. The contract will always include an agreed amount of miles, to ensure that the car is returned in a condition that makes the whole thing more profitable for the leasing company. So, if a company was looking into Audi A1 business car leasing for example, they would typically look at a contract that would demand a down payment in advance, which could be as low as £99. The down payment is usually the sum of 3 of the monthly payments. The monthly payments are determined by how long contract is required for; they are normally spread over 2 or 3 years in total. On most leasing websites the deals would be presented in the following format: 3 + 23 or 3 + 35. So, if you are looking at Audi A1 Contract Hire for say £200 a month and you see 3 +23, this simply means that you have to pay the equivalent of 3 months up front, so £600 in this example, followed by 23 monthly payments of £200.

The mileage is always agreed prior to the parties entering the contract and there will be an excess mileage rate to encourage people to stick to that agreed mileage. It is very important that you remember the agreed mileage, to avoid being hit with a huge bill at the end of your contract.

The main difference with a business contract is that the business will be subject to a VAT charge. As a business they can reclaim 50% once the car is returned to the finance company. Any business should always look to their accountant for advice when entering any sort of lease contract.

You can now follow the same principles as above when you consider personal contract hire. If you were to get an Audi A1 Personal Car Lease you would again expect to pay in a 3 + 23 or 3 + 35 format. The only thing you lose out on is not being able to claim back the block VAT. If you don’t own the business but are given the choice of a car allowance whereby you arrange your own lease, or a business contract hired company car, the only difference is you will typically have more choice arranging your own. On the other hand if you aren’t too fussed about the car you drive, taking your business up on a company car is great as it’s less personal admin, and your company are liable if anything should happen to the vehicle, meaning if something does happen to the car, you won’t be hit with the bill, whereas if you did go down the route of Audi A1 personal contract Hire, any necessary repair work would have to be carried out by you