How to Lease a Car For Your Small Business
You may not want or need a lease for your own personal use, but maybe your company does. Before you go and buy a company car to get your employees from point A to point B or whatever service your business provides. Consider leasing the vehicle instead of buying it outright.
The process of leasing for your company and as an individual is similar. However, there are some things that you must take into accountbefore signing the dotted line.
Dealers With Commercial Service
Dealerships that offer leases don’t necessarily offer business leases. You will need to do some searching to find a dealer that matches your needs. Sometimes the dealer will have a specific name, like Commercial Vehicle Center, to help people locate them. Start by searching
You’ll need to do some additional research to determine which commercial leasing dealership offers the best deals. The deals regarding commercial vehicles are not as streamlined as they are for personal leases.
Be prepared to do some additional shopping around to make sure you’re getting the best deal possible. For example, Ford advertises commercial financing with a “much easier process.” What does that mean exactly? The only way to find out is to do some research and compare them to other dealerships.
Businesses can have some very specific needs. Leasing one vehicle for your company may simply require you to walk in and pick something stock from the dealer. But if you need an entire fleet of vehicles the dealership will work with you to make sure your needs are met. Dealers often provide highly customizable packages for those who need fleets, especially heavy-duty fleets, that have highly specialized needs.
In order for this to work, you will need a clear idea of what you need. Be sure to analyze exactly what you will require from your fleet before beginning negotiations with your dealer. Don’t just walk into the first dealership you find and accept their first offer. Organizing your fleet is a major undertaking and requires serious homework.
Make sure the dealership you’re working with actually specializes in the needs you require. Other dealers may have your best interest in mind, but it’s not necessarily true that they will be able to accommodate you further down the road.
Buying vs Leasing
Perhaps the most important factor you need to decide is whether you want to buy or lease. This question is not simple, it depends on what specifically you need for your company. Here are some important elements to consider before making the decision.
If your company is still growing, and your not exactly sure where you’ll be in 3 to 5 years, then leasing your first company vehicle is probably the best course of action. Maybe after a year you realize you don’t really need a company vehicle. Even if you do decide that you should have purchased instead of leased, you still have the option of buying the vehicle at the end of the lease agreement.
The main reason you should not get a lease is if you know you will be doing a ton of driving. If you are delivering goods/services daily then you will probably exceed your lease agreement by the end of its term. However, if you won’t be driving that much, and you don’t want to take out a lump sum of money to buy a vehicle, a lease is probably your best option.
Have Your Finances in Order
Before any dealer lends you a fleet of vehicles, they are going to want to see your business inside and out. One of the biggest hurdles of getting a company lease is getting through the financial hoops. You should have all your financials organized and presentable for financial institutions.
You should have a copy of your latest balance sheet and any other financial documents that can help you demonstrate your creditworthiness. You’ll need to establish a relationship with a lending institution. So they’ll want to look at your business’s cash flow, revenue, debts and any other elements that could impact your ability to re-pay your car loan or make lease payments on time.
If your company does not meet the necessary requirements, you may have to take personal responsibility for the loan. This is a major responsibility but if you trust yourself and your business it may still be the right decision.
Leasing for personal and business use has some similarities but differ mainly in terms of availability and risk. You need to be fully prepared to negotiate with many dealerships and financial institutions to get the best deal possible. It’s not impossible, and if you succeed it can be incredibly rewarding, just be prepared for some serious prep work.