Business car leasing – Flexible vehicle finance for UK companies
Business car leasing gives companies access to vehicles without the upfront cost of buying. You pay fixed monthly rentals, keep your cash flow predictable, and at the end of the term you simply hand the car back or upgrade.
Funding Options by Tide works with 80+ UK lenders, helping 17,000+ businesses secure over £1bn in funding. Compare leasing deals in minutes and find the right option for your business.
What is business car leasing and how it works
What is business car leasing?
Business car leasing, also called contract hire, is a long-term rental agreement. You choose the vehicle, pay fixed monthly rentals for a set period (usually two to five years), and return it at the end of the lease.
It’s different from buying outright or through asset finance, as you don’t own the vehicle. This means lower upfront costs, predictable budgeting, and no worries about depreciation.
How does business car leasing work?
Choose a vehicle and lease term.
Pay an initial rental, followed by fixed monthly payments.
Use the vehicle for business purposes (with mileage limits agreed).
Return it at the end, with the option to lease a new vehicle.
Some contracts include maintenance packages, covering servicing, tyres and repairs for predictable running costs.
Benefits of business car leasing
Considerations of business car leasing
Benefits | Considerations |
Lower upfront costs than buying | You never own the vehicle |
Fixed monthly payments aid budgeting | Exceeding mileage can incur charges |
Access to new, reliable vehicles | Early termination fees may apply |
Potential VAT and tax benefits | Maintenance may be excluded unless added |
Easy to upgrade to newer models | Credit approval required |
Business car leasing vs other vehicle finance
Hire purchase
Spread the cost and gain ownership at the end, often after a nominal option to purchase fee. Suited to assets you plan to keep long term. Learn more about hire purchase.
Finance lease
You rent the asset for most of its useful life. At the end, you can continue leasing, sell on behalf of the lessor or upgrade. Ownership stays with the lender. Learn more about finance lease.
Operating lease
Shorter than a finance lease with lower rentals because the lessor expects residual value. Often includes maintenance and upgrade options. Learn more operating lease.
Secured business loans
Asset finance
Asset finance is used to fund vehicles, machinery and equipment.
Types of business car leases
Fleet leasing
Business car leasing doesn’t just work for a single vehicle. If your business needs a number of company cars, fleet leasing might be the right way to do it. It's especially useful for businesses who supply customers, or have sales representatives traveling to customers, and there are many other options where fleet leasing might come in handy too.
Three options for fleet leasing
Whether you're leasing one vehicle, or a whole fleet, you'll usually have three options when the contract ends: agree on a second lease period (which may have cheaper payments, as the vehicle(s) will be older), agree a new lease and upgrade your vehicle(s), or return the car(s) and end the lease.
Hire purchase
Some business owners may want to establish a fleet as a long-term investment. In that case, hire purchase could be a better solution. Just like leasing, you’ll have monthly payments, but the key difference is that you'll own the vehicles after the last payment has been made. However, because you're spreading a purchase over time (rather than renting the items) you may have to pay the VAT and an initial deposit upfront.
Business car leasing vs hire purchase
Getting a new company car or fleet is a major decision for you and your business, so it can be quite overwhelming to settle for an option.
Leasing and contract hire may be more flexible in terms of your business’s future, because you can upgrade your vehicle when you renew the leasing contract, or simply allow the lease to expire when your business doesn’t need a car anymore. But if you're using vehicles for the long term, leasing may work out more expensive.
Several cars at once
On the other hand, it can be difficult to purchase several cars at once. Hire purchase means you can spread the cost, and it may also improve the strength of your balance sheet. Hire purchase also offers your business more control — for example, if you'd like your fleet to be branded or modified, hire purchase gives you the flexibility to do so.
Finance leases
Finally, it's worth mentioning finance leases, which fall somewhere in the middle between business car leasing and hire purchase. Finance leases allow you to delay the decision of leasing vs. buying a company car, so you have time to decide whether you want to keep the car in the end. That being said, when you think about fleet leasing, you should bear in mind that it comes with additional maintenance costs. Most companies would usually hire a fleet manager to ensure all vehicles are cleaned and taken care of.
Find the right lender
If you can’t decide which business car asset finance is best for your business, we can help you find the right lender, and see what your business is eligible for.
Is business car leasing right for my company?
Leasing works well for businesses that want:
Lower upfront costs and predictable outgoings
Access to modern, fuel-efficient cars
To avoid depreciation risk
VAT recovery and tax-efficient structuring
It may not suit businesses that:
Drive high annual mileage beyond lease limits
Want ownership at the end of payments
Prefer to use older vehicles long-term
Example use cases
Consultancy firm – leases premium cars for client-facing staff, upgrading every 3 years.
Logistics business – leases multiple vans under van leasing to keep fleet costs manageable.
SME startup – leases a single car with maintenance included, keeping costs predictable.
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FAQs on business car leasing
What’s the difference between business car leasing and personal leasing?
Business leasing is designed for VAT-registered companies and may include tax benefits. Personal leasing is for individuals, without business tax advantages.
Can I claim VAT back on lease payments?
If your business is VAT-registered and the car is used exclusively for business, you can usually reclaim 50% of the VAT on the finance element and 100% on maintenance.
What happens at the end of a business car lease?
You return the vehicle. There is no option to buy, but you can take out a new lease.
Can startups lease cars?
Yes, but it can be more difficult without trading history. Alternatives include business loans for new businesses.
Does leasing affect my credit score?
Yes, lenders check your credit profile. Timely payments can improve your business credit rating, while missed payments can reduce it.
Estimate your costs today
If you're ready to take your business to the next level, use our business loans calculator to get an idea of what you can afford.
Want to understand the cost of your loan?
Use our business loan calculator below to find out how much you can borrow to take your business to the next level.
Calculations are indicative only and intended as a guide only. The figures calculated are not a statement of the actual repayments that will be charged on any actual loan and do not constitute a loan offer.
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Representative example*
• 9.7% APR Representative based on a loan of £50,000 repayable over 24 months.
• Monthly repayment of £2,291.56. The total amount payable is £54,997.44
*Some lenders may apply fees during the application process, please note that these are set and provided by these entities.
Annual Percentage Rates
Rates from 8.2% APR
Repayment period
1 month to 30 years terms
Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.
It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.
Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.
Vivek Seda
Business Finance Manager
Vivek is the Asset Based Lending Manager at Funding Options by Tide. Vivek has been in the industry for over 10 years, working for both lenders and brokers. His product specialisms cover Asset Finance, Invoice Finance, Property Finance and structured transactions.