Should I lease, rent or finance my car for business  

A Mini, that’s what the business needed. Something that could glide through traffic; a car that could get from one point to the other, quickly, fuel efficiently, and in style.

The business didn’t need a White Van. It was really just for running documents and travelling to client meets. There was only one dilemma in my mind: “Should I lease, rent or finance the car for my business?”

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I wanted to make the right choice, so I needed to conduct a little research and find out what the best option was. Now, a year later, I’ve found that I made the right choice, but each business is different, so you’ll want to analyse all of the following options before you commit.

Car Rental

Let’s say that you, as I once did, decide to rent a Mini Classic. You’ll soon realise that while this arrangement works very well for a day or two, it is not normally a good long term arrangement. Car rental companies force you into ‘their’ contracts; they required that I bought additional Mini Classic car insurance (for the Mini that I was renting). Even though I already had car insurance that would cover any accident, their contract meant that if I didn’t take their offered insurance I would have had to foot the bill for “Loss of use”. This meant that in the event of an accident I would have had to pay a fee for the time the car was being repaired (loss of work use for that rental). Needless to say, these fees were not cheap.

Of course there are also other ‘miscellaneous’ costs associated with a rental. In other words, you never end up paying that low headline fee advertised in the paper and so car rentals are rarely a long term business solution. If, however, you need a short term option, they may be the right choice for you


Car leasing is becoming more and more popular in the business world. This is certainly an option to consider, as there are more than a few benefits to obtaining a business car using this model.

  1. Offers a fixed leasing contract, for a period that generally ranges from 2 to 5 years.
  2. This option also includes certain maintenance benefits; you don’t have to pay additional costs for maintenance servicing, tyres and other items when you purchase a ‘fully-maintained” lease option.
  3. Lease payments are fixed for the term of the lease. This makes it easier for you to budget business expenses.
  4. Leasing can eliminate many of the risks associated with owning a vehicle. The only additional item you’ll need to pay for is car insurance.
  5. If you are registered for VAT you can claim a proportion of the finance rental when you file.

There are a couple of negative points to the option of leasing however, and you’ll want to consider these before making a final decision. Lease contracts tend to be inflexible, so if you want to return the car before the contract is up, you’ll have to pay an early termination fee. There may also be costs incurred at the end of a lease, depending on the contract you opt for.

Why Buy?

As a person who has both bought and leased business vehicles, I can tell you that there are a lot of advantages to buying. Two of the key benefits to buying a business vehicle are as follows.

  1. You own the car and as a result it is deemed an asset. You have the right to sell the business vehicle at any time, as long as you are not restricted by finance agreements.
  2. Unlike a lease, a car that you buy can do as much or as little mileage as you require. Often leases will restrict you to a certain annual mileage.

The main drawback to buying is of course that you do need to offer a large up-front payment, whereas you don’t in a leasing agreement. You also bear the costs associated with the depreciation of the vehicle.

Final Thoughts

Both leasing and buying are good options. If you want predictable expenses, and easy maintenance, then the fixed costs associated with leasing may offer the best solution. If you are cash rich then buying can offer you more flexibility.

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