Personal or Business Leasing: What is the Difference?
When it comes to leasing a car or van, the choice between choosing personal or business leasing can be a difficult one.
Obviously, if you aren't applying for vehicle finance as a limited company, partnership, sole trader or LLP, then it's an easy decision to look at personal leasing. But if you are involved in a business, and are planning to use the vehicle as part of that involvement, you may be eligible for business leasing - and the benefits and considerations that that can entail when leasing from Nationwide Vehicle Contracts.
So what should you choose?
Types of lease contracts
Depending on your decision regarding business or personal leasing, the choice of which type of lease contract available to you varies; because there are a number of different types of lease contracts available, each tailored for business or personal requirements.
For the business leasing customer, there is:
For the personal leasing customer, there is available:
Each of these as their own positives and considerations, depending on your own personal requirements. So, it is advised that the links relating to each of the contract types above are followed to make sure that it is right for you; both personally and maybe as a business.
Occasionally, some car manufacturers offer special rates for business customers only, which can result in a price difference between business and personal prices - which is one of the reasons that it may be advantageous to you to choose business leasing.
Other benefits exist such as the fact that, as a business, it is possible to reclaim up to 50% of the rental (for cars) or up to 100% (on commercial vehicles) against tax if the vehicles are leased on a business contract hire agreement. And then you can also take advantage of other exclusive extras, such as outsourced fleet administration, that personal customers would not have use for.
VAT can also be claimed back in a business leasing scenario.
So, how do you find out if you are eligible for business leasing? And what is required from you if you are?
As stated at the start of this blog: If you are applying for vehicle finance as a limited company, partnership, sole trader or LLP, you may be eligible for business leasing.
Firstly, take yourselves off to the eligibility quiz that you can find here to find out if you are likely to be eligible for finance. If you find that you are, then there is certain information that you will need to supply to us in the process of applying.
This information includes:
- Company details – including name, address, company reg. number and annual turnover
- Director details – including name, date of birth and marital status
- Business bank details – including bank name, account number and sort code
In certain cases such as a business being less than a year old or the applicant having been refused vehicle finance before, additional information, such as 3 months' business bank statements or some management accounts may be required, along with a director's guarantee.
But don't worry if, as a self-employed person, you don't meet the criteria, as personal leasing may well be an option for you.
Whether you are self-employed or not, it is individual financial circumstances and preferences that determine the type of business leasing contract that is suitable for you. If you're uncertain or have any questions about what to consider when choosing a contract type, ask one of the Nationwide Vehicle Contracts Sales Advisors - they will be happy to help.
Personal contract hire is very similar to a business contract hire agreement, with the exception that all personal contract hire prices include VAT, and the offers from manufacturers sometimes aren't as forthcoming.
But, apart from that, the benefits of leasing a car through Nationwide Vehicle Contracts are just the same:
- Fixed, low monthly payments
- Low initial rental
- Inclusive vehicle tax and breakdown recovery
- Variable contract duration and mileage terms
- Optional maintenance package to spread the cost of servicing
- The opportunity to drive a new car every two, three or four years
- Standard manufacturer’s warranty
- Free delivery of vehicle to anywhere in the UK (dependent on location and manufacturer)
As with many financial decisions, there are considerations to be made when deciding to lease a car. For contract hire, these include:
- Early termination of a leasing contract can be expensive
- If you exceed your agreed mileage, you will be charged extra on a 'pence per mile' basis
- The vehicle must be returned in a well-maintained condition. Any damage that exceeds the Fair Wear and Tear guidelines will be chargeable
Find out more about the benefits and considerations in our guide to personal contract hire.
So, how do you find out if you are eligible for personal leasing? And what is required from you if you are?
Firstly, take yourselves off to the eligibility quiz that you can find here to find out if you are likely to be eligible for finance; and if you find that you are, then there is certain information that you will need to supply to us in the process of applying.
This information includes:
- Personal details – Including marital status and number of dependants
- Address details for the past five years
- Employment details for the past three years
- Your bank details – This information is used to determine how you have managed your existing accounts and your ability to make payments on time. No money can be taken from your account without your permission
- Your monthly income and expenditure – This information is used to ensure you are comfortably able to afford the finance deal for which you have applied
Additional information might be required, such as more detail regarding employment and monthly income and expenditure (especially if you are not currently in full time employment, or if you’ve only been with your current employer for less than five years), but this is all to make sure that you are not 'over-stretching' yourself and that you are able to afford to enter into a personal leasing contract.
Whichever option you choose, you can be assured that Nationwide Vehicle Contracts is here to help - and they are all available to talk you through the processes involved from deciding on your options to the final agreement.
If you have any more questions regarding the choice between personal and business leasing, or indeed the whole concept of leasing itself, then visit our FAQs page here.