Is It Better to Lease or Buy a Car for My Business?
Is it Better to Lease or Buy a Car for my Business?
To lease or to buy a car? This is a question many of us face when looking for a new car for our business.
With so much to consider, and definite advantages to both options, deciding between buying and leasing can be difficult. However, understanding exactly what each of these options offers your company is crucial to making a decision that makes sense for you.
At Kia, we know the importance of a decision like this. That’s why we’ve put together a complete guide to vehicle lease vs. purchase and their pros and cons, so you can make an informed decision suited to your business needs.
What is leasing a car and is it worth it?
Car leasing, often referred to as Contract Hire
, refers to hiring a vehicle for an agreed term. Lessors generally pay an initial upfront payment, followed by monthly fixed payments, and then the car is returned at the end of the contract.
Car leasing has been around for a while, but it’s recently become an increasingly popular choice for many drivers and businesses. Let’s find out why.
Benefits of leasing a car for your business
There are various advantages to leasing a car, particularly for businesses leasing a company car. These benefits include:
• Low monthly payments – Perhaps the most obvious cost benefit of leasing a company car is avoiding the high upfront cost of buying a car outright. Leasing offers lower monthly payments at a fixed rate, which are easier to budget for.
• Maintain an up-to-date fleet – Car leasing enables you to drive a new car every couple of years. This means you can keep your fleet completely up to date with all the latest safety and efficiency technology and provide a modern driving experience for your staff.
• No depreciation worries – When leasing a car, there’s no need to worry about vehicle depreciation, as you'll be giving the car back at the end of the contract. According to research by GRIDSERVE
, 40% of the UK public were drawn to car leasing by the benefit of not having to worry about depreciating value.
• Claim back VAT – If you’re a VAT-registered company leasing a vehicles, you can claim up to 50% of the VAT on the rentals (lease) and 100% of the VAT on any maintenance back during your term. Visit the gov.uk
website for more information.
• Sustainability – Car leasing often provides easier access to electric cars, so businesses can improve the sustainability of their overall operations. There are numerous benefits of electric company cars
, from tax advantages to greater efficiency. The upcoming ban on the sale of new petrol and diesel cars in 2035 means, after this deadline, you’ll no longer be able to lease, or buy, new petrol or diesel cars. Switching to an electric fleet now will enable you to maintain an up-to-date fleet and allow you to take advantage of current EV tax benefits, like the road tax exemption that is due to end in 2025. If you are looking to lease or buy an electric company car, remember to consider the time it’ll take to install appropriate charging infrastructure.
• Reduced maintenance costs – If you opt for a maintenance-inclusive contract, this will include coverage for general wear and tear. At Kia, we offer maintenance contracts, so your Kia will be taken care of by one of our experts at no extra cost.
At Kia, we offer tailored Business Contract Hire deals across the entire Kia range, including hybrid
and electric cars
. Our Contract Hire deals come with numerous Kia benefits, like our exclusive 7-year warranty, roadside assistance and maintenance-inclusive contracts.
Find out more about business contract hire deals
and find the perfect Kia for your fleet.
Benefits of buying a car
If you’re able to, buying your own fleet also has its own advantages. These include:
• Total flexibility and control – Perhaps the most significant advantage of buying vs leasing a car is having total flexibility and control. You aren’t locked into any kind of contract, so you can sell the car whenever you wish.
• No mileage restriction – Unlike leasing a company car, there’s no contract or mileage restriction when buying a car. That means your fleet can rack up as many miles as necessary without incurring any extra costs.
• Lower long-term cost – While buying a car outright involves a high upfront cost, if you keep the car for long enough, buying provides better long-term value.
There are numerous other factors, not mentioned here, that you should consider when choosing whether to lease or buy a vehicle for your business. It’s important to speak to a financial advisor or a member of our dedicated Kia business team when considering your options.
If you want to find out more about how to buy a car on finance
with Kia, explore our Contract Hire
offers. You can also visit our Business
page to learn more about how we can help you build the perfect fleet.
Images shown are for illustration purposes only and may not be to full UK specification. Features shown are not standard across the Kia model range and availability will vary dependant on model. For further details please refer to the individual model specification sheets.
Product availability varies by models. To find out which products are available for your vehicle, please contact your Kia dealer.
*The range was determined according to the standardised EU measurement procedure (WLTP). The individual driving style and other factors, such as speed, outside temperature, topography and the use of electricity-consuming devices/units, have an influence on the real-life range and can possibly reduce it.