Is leasing just a solution for people with bad credit? Is it tough to secure a lease as a smaller company? And will your business end up skint if a car on lease damaged in an accident?Everyone knows somebody with gloom-and-doom doubts like these about vehicle leasing – but as we’ll see in this article, they often turn out to be more myth than reality.
Myth #1: you’d be better off buying
Everyone likes to own nice things – but from a business perspective, buying doesn’t always make the most sense. Unlike assets like premises and production equipment, vehicles tend to make poor investments, depreciating steadily from the moment you buy till the moment you sell them on.
A new car will typically lose 25% of its value by its first birthday, after which point it will depreciate by about 15.6% annually for the next four years. So, a car that costs €30.000 new could be worth just €22.500 after one year, and €11.417 after five. If there’s a financial attraction in that, we’re not seeing it.
Another advantage of leasing is that you don’t have to go through the rigmarole of selling when you’re done with the vehicle – a process likely to drag on for several weeks or even months, eating up valuable manhours all the while.
Further, the cost of car or van leasing is manageably structured (typically in monthly instalments), in contrast with the variable costs of buying. That’s a better fit for most businesses.
Myth #2: exorbitant charges for damages
The reality is that when a vehicle is on the road for a number of months or years, there’s a chance it’ll pick up the odd bump or scrape. Lessors need to factor this risk into their terms – otherwise any customers unlucky enough to experience an accident would have a costly, unsatisfactory experience.
At Sixt Leasing, we make it a point of policy that clients must take out a comprehensive insurance policy on the vehicles they lease from us, so they are covered in case of mishap. Clients can arrange their insurance independently, but they also have the option to have us arrange it for them in exchange for a flat monthly fee – perfect for time-pressured business owners who prefer to spend their time on revenue-generating activities.
Myth #3: SMEs need not apply
Vehicle leasing for business isn’t just for big companies. In-fact, a major lessor’s clients will typically include sole traders, blue-chip corporations, and just about every size and shape of business in-between.
It’s true that business car leasing companies differentiate between smaller and larger clients – but only in terms of the tailored services they design for each end of the spectrum. In Sixt Leasing’s case, smaller clients benefit from a leasing service made supremely simple, with help from an extended hours customer support team (0700-2100 Mon-Fri; 0700-2000 Sat) and online resources including a handy Leasing calculator. For larger clients, we can take on the considerable administrative workload that comes with managing a large fleet of vehicles.
Myth #4: only people with bad credit lease cars
This is perhaps the most clearly false myth of all, because leasing a car or van is always subject to a credit check. If your credit rating is poor, you’ll be unlikely to secure the lease.
So, it’s actually people with good credit ratings that lease cars. People with bad credit ratings will need to improve their score first. We discuss some ways to do this in our article on How to understand vehicle leasing for business in 2 minutes.
Another point we should make here is that for many businesses, the decision to lease is made strategically, rather than from financial necessity. Leasing offers structured payments, limited initial outlay, and freedom from selling responsibility – all of which add up to a superior fit for the lean business principles more and more businesses are now adopting.
Myth #5: it’s hard to get a vehicle to suit your business
Whilst it’s true that some lessors can be restrictive over the specifics of their vehicles, Sixt Leasing aims to provide the most flexible car leasing Ireland has to offer.
As all our vehicles are brand new, we’re happy to let you pick out your preferred paintjob, upholstery, accessories and special features. This means you can tailor your leased vehicle to your brand, your activities, or even your team members’ personal tastes.
Considering that these options apply to our range of over 10.000 cars, it’s fair to say there’s ample scope to find an ideally suited vehicle for your business. If you’ve heard otherwise, that’s just a myth.