Business and personal leasing are two methods of acquiring vehicles to use over an agreed period without having to worry about upkeep or potential faults. Though similar, a few differences distinguish them - intended use, vehicle options, responsibility, financial and tax implications and contract terms. Read our leasing guides for further information.
Intended use of vehicle
A business lease is typically for commercial use such as transportation of services, employees or goods and is a contract agreement designed for limited companies, sole traders, partnerships and LLPs. One of the most popular uses for business leased vehicles is sales which can result in a large number of miles driven each year. Personal leasing is for an individual to use the vehicle to get around in their daily life. A personal lease will normally have a much lower mileage per annum allowance.
Businesses tend to come with specific needs for their vehicles, requiring a selection that wouldn’t suit a personal lease. These requirements may be size, capacity or load bearing requiring specific cars, vans, pick-ups or permission to place branding stickers and motifs. Selection may also be determined by the licences the intended drivers possess. Personal leasing offers a greater range of makes and models meaning the customer can select a model based on safety features, tech, specs or even the colour and look. Whatever takes their fancy.
As mentioned, a business lease often requires a higher annual mileage allowance which comes with a premium but since the vehicle is being used for business purposes the payments are often considered as a business expense and can be tax deductible. Also, a business lease contract is agreed upon by the company so the driver is not responsible for any payments. Personal leasing involves an individual entering into an agreement whereby they are fully responsible for all payments on the vehicle which must be made with after-tax income. Read about our leasing options.
Responsibility and ownership
In a business leasing scenario, the company or organisation assumes full responsibility for the leased vehicle throughout the agreed term. The finance provider retains ownership, and the vehicle is returned at the end of the agreement. A personal lease is very similar in this respect with the individual being responsible for the vehicle during the lease period. They will also return the vehicle at the end of the contract term but may have the option to purchase the vehicle outright at its current market value.
Both business leasing contracts and personal leasing agreements usually range between 24 to 60 months. Business contract hire agreements often come with a higher mileage allowance, especially for sales vehicles making regular long-distance journeys. Whereas, personal leasing contracts will typically have a much lower annual mileage allowance which helps keep the monthly costs down.
The lease for you
If you are trying to determine whether a business or personal leasing option is best for you, then the experts at Gateway2Lease are on hand to guide you through the process making sure you not only make the sensible choice but also the one that makes you happiest.
Get in touch and we’ll help get you on the road.
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