So, the time has come. You have established your business and had three successful years. Your company has grown and now you have decided you need cars for your business. The time of buying business cars outright has passed. Leasing and finance options are much more affordable and far less hassle to deal with as a business than buying these cars outright.
But, one of the most important questions often asked by businesses regarding leasing is do you need a deposit to lease a car for business use? Some of you will be glad to hear that the answer is no, you don’t necessarily need a deposit to lease cars.
This is particularly good news for those of you small business owners, who are running relatively successful companies but don’t necessarily have the spare cash available for deposits on a fleet of vehicles.
How leasing and finance work for businesses
There are a variety of options available for you to either lease or finance cars for your business. The leasing option is a Business Contract Hire, whilst the two most popular finance options are Business Contract Purchase and Business Hire Purchase. All of these offer no deposit options.
Business Contract Hire
Business Contract Hire (BCH) works by you usually placing a deposit, followed by a series of monthly payments for the duration of the agreement and then you hand the cars back at the end. Now, if you don’t want to pay a deposit at the beginning of the agreement, the only thing that changes is that the amount you pay each month is a little higher because the cost is shared out across the agreement.
Business Hire Purchase
Business Hire Purchase (BHP) is a finance option that allows you to pay a deposit, followed by monthly payments and at the end, you take ownership of the car without additional costs. The same thing applies to BHP as it does to BCH. If you choose not to pay a deposit, the amount for your monthly payments will increase.
Business Contract Purchase
Business Contract Purchase is a finance option, but it also straddles the line between finance and leasing. It is also the most flexible agreement when it comes to your final options and is likely the most suitable option for businesses. A BCP agreement is split into a deposit, monthly payments and an end balloon payment.
The balloon payment is the Guaranteed Minimum Future Value that is calculated at the beginning of the agreement. If you wish to take ownership of the car at the end, you must pay the balloon payment. Otherwise, at the end of the series of monthly payments, you can simply hand the car back as you would with a BCH. Now, if you choose not to pay a deposit on a BCP agreement, the entire cost is spread across the monthly payments and does not affect the balloon payment amount.
Is not paying a deposit worth it?
It all depends upon you and your businesses requirements and ability to pay. If you don’t want to pay a deposit on each car, you can expect the monthly payments to be higher than they would if you paid a deposit. So, if you can afford those monthly payments and are happy to pay the higher amount, then feel free to go for a no deposit business car lease.
Hippo Leasing offers a great selection of cars for you to lease for your businesses. They have deals available for both normal business car lease deals and no deposit car leasing and their staff will match the deal to your requirements.