This content was submitted on behalf of Lease2buycars.com
STARTING a new business is exciting and daunting in equal measure.
There’s the satisfaction of seeing your business plan finally coming to fruition alongside the pressure of knowing that from now on the buck stops with you. And in recent years, as banks and other lenders squeeze their coffers tightly shut to all but the most solvent of organisations, there is added financial worry as you try to juggle start-up costs and outgoings.
In a nutshell – the lower your initial overheads in these early days, the more likely it is that you’ll make it through the first difficult six months.
With this in mind, if your business is going to need a company car or a small fleet then lease to buy could certainly be worth considering. It will get you on the road without putting a large dent in your capital reserves, and means you can manage the cost of your motoring as you work to get your business off the ground.
So how does it work and what are the advantages?
Lease to buy essentially combines elements of both a lease and a loan.
You pay an initial deposit for your vehicle and then pay off the balance in monthly instalments that you agree with the dealer. The more you pay upfront – the less your monthly repayments will be.
So if you do have a sizeable amount set aside for your vehicle (but not quite enough to buy outright) then it’s worth paying as much as you can initially.
After a set period – usually anything from 12 to 36 months, depending on the value of the car – you own the vehicle outright and can sell it on if you wish in order to upgrade to a newer model.
One of the main advantages of this type of car finance is that you have a good chance of being approved for the contract even if you’re in the very early stages with your business and haven’t yet built up your credit worthiness.
The vehicle acts as security for the lender, so approval is not necessarily dependent on your credit score.
The one thing to bear in mind, however, is that if you don’t keep up repayments on your vehicle, the dealer does have the right to repossess it. They can do this without a court order if you have paid less than a third (usually) but may need to go to court if you have made over a third of the repayments.
Another advantage of this type of contract is that the application process tends to be quick and easy and forms are not as lengthy as they would be for a bank loan, for example.
The lender only needs some basic information from you and an approval in principle can be made within a day or two – ideal if you need to get on the road as quickly as possible.
As with all financial arrangements, it pays to do your research and make sure that this is the best set up for you and your business. But if you want to manage your vehicle/fleet costs with set monthly payments then lease to buy is definitely an option worth thinking about.