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A Guide To New Business Car Leasing

When setting up a new business, hitting the ground running is vital. From finding the right premises to investing in marketing, there is a lot to get right, and the pressure to resonate with your customer base is particularly high given that a whopping half of all new businesses fail within three years of starting.

Another thing you’ll have to think about is getting a vehicle (or vehicles) for your business. Leasing is usually the preferable option for businesses needing a car to make frequent visits to clients or a van to transport tools, goods and services. However, without pre-existing credit and financial history, taking out this kind of agreement can be challenging. With this in mind, we have put together this guide to new business car leasing so that you can be confident about your options when it comes to getting a vehicle as a start-up or new business.

Who Can Get A Business Car Lease? 

While it may typically be tricker to get a business car lease if you’re newly incorporated, any company that is registered as a limited company, partnership, sole trader or public company can make an application for a business car lease. There is no specific requirement to have been trading for a certain amount of time before you apply, but you will likely find that it is harder to get accepted or that you have to provide additional documentation if you are a new business.

Eligibility Criteria

All businesses must pass affordability checks (including a credit check) to be eligible for a vehicle lease. Typically, the finance company will ask for a number of documents to carry this out, including company details, director details and business bank account information. 

A good credit history reassures the finance company that your business can keep up with the agreed payments during the duration of your vehicle lease. This is what can catch new businesses out, as they are unlikely to have the type of credit history to reassure the finance company that you can keep up with monthly payments throughout the term of the lease. New companies or start-ups may therefore be required to provide additional information as proof of financial status such as:

  • Business bank statements - often three months to prove that you can keep up with your liabilities
  • Management accounts
  • Cash flow forecasts
  • For limited companies, the finance company may also request a guarantee from directors

How To Boost Your Application

While it’s unlikely that you will meet the initial credit requirements for a vehicle lease as a new business, don’t feel disheartened or put off applying. Providing your finances are in order, there are still a number of things that you do to boost your application for a new business car lease and there are a number of finance providers who offer a range of options for car leasing for new companies. 

We have outlined some of our top tips for improving your application below:

Start Building Credit History

As a new business, the sooner you start to build a credit history the better. If you cannot otherwise meet eligibility criteria, it can sometimes take as long as two to three years to build the profile that finance providers are looking for so it’s important that you improve your credit score as soon as you can. You can do this by paying suppliers and filing accounts on time, sticking to overdraft limits and limiting the frequency at which your business applies for credit.

Pay Attention To Personal Accounts

Finance providers may sometimes look at the personal accounts of directors in circumstances where the business itself has not yet amounted a suitable credit history. Personal accounts are a good indicator of financial stability so avoid defaulting or exceeding personal overdraft limits. This will also help you to apply for a personal lease should a business lease not be a suitable or viable option.

Offer A Higher Initial Payment

Many business car leases require as little as one monthly payment upfront, making this way of securing a vehicle an extremely affordable option for businesses. However, one way that new businesses can strengthen their lease application is by being willing to make a larger monthly payment such as 12 months upfront. Paying more upfront gives the finance company greater security which may make them more inclined to lend to you.

Find A Guarantor

If you do not have the funds available to make a sizeable upfront payment, you could give the finance company greater security by providing a guarantor. A guarantor agrees to take responsibility for the monthly payments should your business fail to pay, therefore assuring that the finance company will be paid no matter the circumstances. It is not uncommon for the company owner to act as guarantor and therefore take personal responsibility for the payments if the business cannot pay.

How Intelligent Vehicle Finance Can Help

With a lot to bear in mind if you are considering applying for a new business car lease, it is important to talk to a provider you can trust. The Intelligent Vehicle Finance team has sizeable experience helping new and start-up companies secure a suitable vehicle lease and will always work alongside you to not only create a strong application but also build your case with the finance company in question. 

Our expert team can also help you explore alternative options like a personal or short-term lease in the event that it is not possible for you to secure car leasing for your new business, so don’t hesitate to browse our in-stock deals online today and get in touch with us to discuss your business and its requirements.