Maybe you’re a plumber, who’s started taking on bigger jobs, and can’t fit the tools you need in a car anymore. Or your old faithful personal car has 150,000 miles on the clock, is on its last legs, and just isn’t creating the right impression at sales meetings.
This could mean you need a car or van for the business, but you’ve heard that newer businesses can’t lease vehicles. The good news is, that isn’t strictly true.
Eligibility criteria relating to the age of your business can vary between leasing companies. Arval are a UK leasing and fleet management company providing cars and vans to individuals, small and large businesses. We don’t know the detail behind everybody’s rules, but we can share some of ours to try and dispel some of the myths.
“I’ve been trading less than 2 years, leasing companies won’t even look at me.”
To apply for Business Contract Hire at Arval, you need to have been trading for at least 3 months, with 3 months business bank statements. Contract Hire is a credit product, so we need to have something to credit check against! That said, we try to keep this to a reasonable minimum.
As a newer business, you have just as much right to apply as any business trading for 5, 10 or 50 years.
“The business hasn’t been running for very long, I won’t pass credit.”
Whilst it’s true younger businesses may be viewed as higher credit risks, this doesn’t mean the end of your options. There are several ways funders can work with you and your business to reduce the risk, for example:
- Flexibility to increase your ‘up front’ payment
Contract Hire (commonly referred to as leasing) doesn’t do ‘deposits’ but it does do ‘rentals in advance’. This basically means the number of monthly payments you pay up front. If you’ve only been trading a short time, your application could be accepted based on a higher advance payment, maybe equivalent to nine months instead of six.
Although this could cost a little bit more, in the beginning, the total amount to pay doesn’t change. So you’ll either enjoy a cheaper monthly rental or receive a payment break towards the end of your contract.
“I don’t want to put that much risk on my business so early on.”
If you’re not keen on putting anything extra through your business at this stage, but still need a new vehicle, Personal Contract Hire might be worth considering. The product is essentially very similar, and monthly rentals are often the same. The key difference? This way the contract is between the leasing company and you as an individual, not your business. You could still use the car for business purposes and even claim back the mileage, without the associated risks.
So the real question is, which car or van are you going to choose?