Running a startup comes with a myriad of financial necessities such as setting up your website and finding office space to suit your needs. Having a company car is often not the first thought in the mind of a startup business owner, but it should be something that you consider seriously. There are many second-hand cars for sale that are ideal for small business needs, and having one can help immensely in reaching clients for meetings and transporting products.
If you are looking into leasing a car but only have a startup budget, the best thing to do is look for a second-hand car dealership to find out what cars they have available and then go to your bank with an idea of what model best suits your budget. Outlined below is some helpful advice on how to lease a company car on a startup budget.
When you lease a car, one important thing to consider is the ownership of the vehicle. A leased vehicle is not a vehicle that you own outright, but you are able to own it after the lease period if you have stipulated this in your lease agreement with the bank.
A lease is ideal for a startup business as you may want to upgrade your vehicle as your business grows, or change from a regular car to a bigger van for deliveries, both of which are possible when leasing. It is also a better option if you have a tight budget but need a car for transporting employees and goods.
Sadly, as a startup, you may be considered a ‘high-risk’ client by many banks and financial institutions which means it can be difficult to get a lease agreement approved. If you have looked through the abundance of second-hand cars on offer and found one you like to fit your budget, this could help your case with your bank.
Not getting approved is often a worst-case-scenario, but it is something that you should consider. You may be approved for a lease with a higher interest rate due to how new your company is or you may have to take out a longer lease so the bank does not see you as too ‘high-risk’. If your business does not take off in the way you were hoping, you run the risk of your vehicle being repossessed by the bank to recount their money.
This is an important step in looking at leasing a vehicle, especially when you are operating on a startup budget. You will need to make sure that you know exactly how business leasing works, as well as what documents you will need to provide with your application.
You will need to look at the costs involved to, such as fully comprehensive insurance, servicing costs and whether or not these are included in the monthly contributions as well as the excess mileage charges. You will have to take your budget into account, considering all of your monthly costs carefully once you have ascertained what you will be paying for your interest rates and service fees.
One benefit of leasing second-hand cars for sale is that there is usually no down payment that needs to be made, which is ideal for the startup budget. Some financial providers may ask for a small one but you can shop around for dealerships or banks that will not ask you for a down payment for your lease.
If you have to give a down payment, be sure that it is an amount your business can afford, and if not, rather wait until a time when your startup is financially stable to do so. A down payment might make a bank see you as a lower-risk client, but as you are not purchasing the car it might not be a necessary requirement. Be sure to find out from your bank ahead of time before you go out car shopping for your perfect vehicle.
An important aspect to consider when leasing a vehicle is your end-of-term options. One option to explore is buying the car after the term has ended. This is a good option if you feel that the car suits your needs and is a financially viable option for your business in its current situation.
If you want to upgrade your vehicle or opt for a bigger one that you can make deliveries in, then you can return the vehicle at the end of your lease and renew it for the next vehicle. This is often the way that many startups choose to go due to how flexible it is with regard to their finances. Buying a car might mean that you have sole ownership, but if you have to renew it or would prefer a different model then leasing one with the option to return it is the best option for your needs.
