Is Your Company Car Too Good To Lose?
For many people, having the benefit of a company car can offer many advantages over having to use a personal vehicle for your commute. This can include everything from saving you from having to fund your own car, to offering great benefits from not having to worry about depreciation or the potential of being in negative equity or often including avoiding maintenance costs for the vehicle.
Having a company car as a business perk is no longer as beneficial as it once was, the introduction and changes of things like Benefit In Kind taxation has meant that it may not offer the financial advantages or convenience that it once did, and can sometimes end up costing you more money than you would have thought. There had been incentives to alleviate the cost somewhat, for example lower tax rates for electric vehicles, however these are slowly being increased and will no doubt eventually be phased out entirely. See our previous blog post The Benefits For Businesses Of Going Electric to find out more about the benefits.
However, being offered a company car as an incentive is still a very popular occurrence and if you are in this position, and coming towards the end of your current company car agreement term, you may not know that you can purchase that same vehicle for yourself.
The Business Benefits
As a business with a company car lease, you are not entitled to buy the vehicle yourself due to the tax benefits they have received through that vehicle, however if you are the lessee, you can purchase the vehicle as your own personal car. Particularly useful if you are enjoying the use of the vehicle you are currently in and there is insufficient reason to upgrade to a newer vehicle. When the lease comes to an end the business will either return the car to the leasing company or have to sell the car through a car auction in order to try and recoup the equity that they then owe to the leasing company to ‘pay off’ the remainder of the car’s value.
Not only is this a risk for the business but it may end up costing the company money in order to raise enough capital to cover the owed cost of the vehicle. This means that any employee who wishes to buy their company car will save the business the hassle and potential costs of having to go through this process. Not only that, but if anything, a company car is a bit of a burden and unwanted financial responsibility for a business. A company car is usually leased over a set period of time and therefore if an employee leaves the business, that business is left with the company car to either distribute to someone else, continue to pay for despite not being used or attempt to cancel the contract and return to the lease company, often with additional and severe financial cost to the business.
This means that if you currently receive a company car, quite often a business will prefer to offer a financial incentive or allowance instead of said company vehicle, so that if an employee is to leave, they are not left with a fixed term expense that is difficult to then get out of. Not only does it make it easier for the business to offer this incentive, it also can mean that any additional funds received can be used towards the company vehicle you have purchased as a personal vehicle, saving even more costs to yourself.
The Personal Benefits
As the employee, you can also take advantage of the fact that the car is usually offered to purchase at a lower rate compared to the market value of the vehicle. This means that not only are you saving money compared to buying a similar car elsewhere, but you could possibly have additional equity in the vehicle should you wish to sell, or part exchange the car at a later date. Not only that but purchasing the same car that you have been using throughout the duration of the lease means that you know how the car has been driven, how well it has been maintained and what condition it is in as you were the previous driver of the vehicle.
As well as providing peace of mind that you know how the car has been treated by the previous owner, as it was you, it also limits any underlying costs or hidden issues with the vehicle compared to if you were looking at purchasing another car elsewhere. Company cars often also have lower mileages on them due to the fact that they are usually used merely for commuting to and from the workplace, so are often of a lower mileage for its age than a similar vehicle available on the market.
How Oracle Car Finance Can Help
The number of enquiries that we have received at Oracle Car Finance of individuals looking to finance a company car they are purchasing has risen rapidly in recent months, and is a perk that not many people actually know about. The rise in taxation costs of company vehicles and the rising cost of living has meant that purchasing your company vehicle from your employer is more popular than ever, and can be a very smart move financially. So if your current company car lease is coming to an end shortly and the vehicle itself is too good to let go of, speak to your dedicated Account Manager about your financing options.
At Oracle Finance we have your new car funding sorted, no matter which kind it is. Our expert Account Managers use our panel of specialist lenders to help you to find the perfect package, bespoke to you and your circumstances. Our team are always on hand should you have any questions about arranging car finance and your dedicated Account Manager is ready to take your call today.
With over 1,900 Trustpilot reviews and a overall rating of 5 out of 5, and as four-time consecutive award winners of the Best Specialist Car Finance Provider award from 2020 through to 2023, you too can find out why thousands of people trust us time and time again to find a smarter, tailored funding solution when looking for your next dream car.