RAM Automotive

RAM Automotive

Short Term Car Leasing in the UK (Complete Guide)

What is Short-term Car Leasing? 

A short-term car lease is exactly what it sounds like – it is a contract you enter into with a leasing company or dealership, paying for part of the value of the car for a limited period of time. A short-term car lease is shorter than the traditional lease term of 2 to 5 years and is more commonly known as long-term car rental.

 

Simply put, you are on a rolling contract in which you are not tied to a long 12 to 14-month deal. This type of leasing is the best course of action for you if your circumstances change quickly and unexpectedly. You will not have to worry about selling or exchanging your car or swapping it for something more suitable if any such situation arises. 

 

Do I Need Short-term Car Leasing? 

Short-term car leases are beneficial, but they are not for everyone due to length contracts. It is important to understand that a more flexible option called long-term car renting exists.

 

Short term Car Leasing for Business

Generally, a short-term car lease is best for an individual or small company that is experimenting with new services and vehicles. If you are a small business owner and stepping foot into new territories, you are probably unsure whether the business growth potential in any given area. In such cases, a short-term car lease or long-term car rental offers the opportunity to not be tied down for significant periods of time. If you need to give your employees/partners access to a car, you will not be tied up with a long-term contract, and can easily hand the car back if the partnership does not work out or the car is no longer needed. 

 

Larger businesses may also benefit from this type of dealing, regardless of their size. If you require different varieties of vehicles depending on specific projects you are working on, a short-term car lease can easily equip you with such cars according to your requirements. It gives you the flexibility to have a car that can fit the needs of your business every time you are experimenting with something new. 

 

Personal or Business Short-term Leasing? 

When it comes to car leases online, there are generally two options available: business or personal leasing. It is vital for you to understand the difference between the two types, to see which one is better suited to your requirements. Here is a brief explanation of both types of car leases to help you understand your options better.

 

Business Short-term Leasing 

What Is Business Leasing? 

A business lease is a contract agreement for limited companies, sole traders, or partnerships to lease company cars with fixed monthly payments. When entering a business leasing contract, you will have to make an initial payment prior to the start of your lease. 

 

The initial payment is usually about 3, 6, or 9 times the cost of the fixed monthly fees for the upcoming months. There are many car leases online which cater to business leasing needs. 

 

The car is leased for a set period of time and returned at the end of the contract. The annual mileage of business cars is much higher than those in personal leases, as business vehicles are more likely to travel longer distances. For business short-term leases, the upper limit of mileage agreements is usually 40,000 miles per year with the company paying for extra mileage if the limit is exceeded. However, a more common limit is 24,000 miles per year.

 

What is Company Car Tax? 

If an employee uses a company car for personal journeys, it is likely to be considered a benefit and the employee may have to pay company car tax. This amount generally adds an expense ranging from £300 and £800 to your yearly tax bill. 

 

What Will You Need To Apply For Business Leasing? 

When applying for a business lease, you generally need to provide the following information:

  1. Company details (name, address, company registration number, and annual turnover);
  2. Business bank details (bank name, account number, and sort code);
  3. Director details (name, date of birth, and marital status);
  4. Three months’ recent bank statements (if the business has been trading for less than two years or high-value vehicles);
  5. VAT returns or utility bills (if the business has been trading for less than two years);
  6. Copy of Director’s driving license or company accountant’s details (for high-value vehicles).

 

What Are The Benefits Of Business Leasing?

In business leasing, VAT can be claimed back. You can also reclaim about 50% of the rental for cars and up to 100% on commercial vehicles against tax. 

 

Personal Short-term Leasing

Personal short-term car leases mostly work in the same way as business short-term leases, except that they are only for an individual with the vehicle being used solely for personal use. The initial payment mechanism is also the same – you will make your first payment, followed by fixed monthly lease payments. When you reach the end of your lease agreement, you need only take the car back, without any end-of-term payments. Personal short-term leasing a.k.a. long-term car rental is the perfect choice for people wanting a stress-free motoring experience without owning a depreciating asset. 

 

With personal short-term leasing, some things to remember are:

  1. The average annual mileage is much lower, closer to 10,000 miles. This is flexible, but increasing your mileage will increase your fixed monthly costs. 
  2. If you leave your lease early, you may incur additional charges. 
  3. You’ll be required to supply information such as personal details, address and bank details etc. when applying for a personal short-term car lease. 

 

There are many benefits of personal car leasing, some of which include:  

  • Fixed monthly rentals
  • Road tax included
  • No depreciation 
  • No disposal issues 
  • Maintenance options are available
  • Flexible terms

 

Why Is Business Car Leasing Cheaper Than Personal Car Leasing?

Business lease deals are cheaper than personal ones because 50% of the VAT can be claimed back, while in personal leases, VAT is not redeemable. Businesses can claim back VAT on maintenance agreements that are taken out on the lease car. 

 

How to Choose the Best Deal for You

Understanding the difference between the two types of deals is the first and most important step in leasing out the perfect car for yourself. When selecting a leasing contract, you should always weigh your options and settle on one which is most applicable to you. 

 

During this process, there is a range of things to consider – most importantly, whether the vehicle in question will ever be involved in business use. Applying for finance as a partnership or sole trader can also determine the most suitable leasing contract for you. 

 

Before signing a leasing contract, you should also decide which vehicle you would like. Whether a large van or a car is more useful to you will also matter greatly in any short-term car lease deal. 

 

Best Short-term Car Lease Deals

  1. Vauxhall Corsa – Petrol Manual

£325+VAT per month

2k mileage limit per month

 

  1. Toyota Yaris Hatch Back Hybrid Auto

£358 + VAT per month

1.5k mileage limit per month

 

  1. VW Polo 1.0 Evo Petrol Manual

£390+ VAT per month

1k Mileage limit per month

 

  1. Suzuki Vitara Estate 1.4 Petrol Manual

£425+VAT per month

1k mileage limit per month

 

  1. MG ZS Hatchback 1.5VTi Petrol

£390 +VAT per month

1.2K mileage limit per month

 

  1. VW Golf 1.5Tsi Petrol

£460+VAT per month

1.2 mileage limit per month

 

  1. Skoda Octavia 1.0TSi Petrol Manual

£599 + VAT per month

mileage limit per month

 

  1. Kia Sportage Diesel Estate 1.6 CRDi Manual

£520 + VAT per month

1k Mileage limit per month

 

  1. SEAT Ibiza Hatchback 1.0TSi Petrol Auto

£410 + VAT per month

1k mileage limit per month

 

Second-hand Short-term Car Lease UK
There are plenty of great options for leasing second-hand cars on a short-term basis, and these have great financial benefits when compared to leasing a new car. Second-hand cars won’t depreciate as much, lowering your monthly costs. 

 

Car Leasing Terms Explained

Initial Payment

The payment you make in the first month is the initial payment. This is higher than the other payments and is calculated as 3, 6, or 9 times the original monthly amount. The initial payment is similar to a deposit as it is the first amount that you pay on the spot. You may need to pay this soon after your car is delivered, and this amount is non-refundable. After you have made the initial payment for the first time in month 1, you will have to pay the regular monthly payment for the remaining months of your lease agreement.

 

Maximum Miles Per Year

This is the average annual mileage limit for your short-term lease contract. You shouldn’t exceed the total mileage for the contract length; otherwise, you might have to pay excess mileage charges at the end of your agreement. 

 

Contract Length 

The contract length is the total period for which your lease agreement stands, for example, 3 months, a year, or so on. During this entire term, you will make a monthly payment to your dealership, and at the end, will take the car back to them.

 

Warranty 

A newly leased car is covered by the same manufacturer warranty as a brand-new car you have just purchased. This way, you will be able to get any non-consumable parts (excluding brakes or tyres) fixed at a local dealership completely free of cost. Most new car warranties are for 3 years. If your lease agreement is 3 years long or shorter, you will be able to enjoy the benefits of the warranty throughout the duration of your lease.

 

Exceeding the Mileage Limit 

Most short-term car lease contracts have an “excess mileage charge” if you exceed the agreed mileage at the end of the contract. This charge will most likely be stated clearly in your lease agreement, so make sure you go through this before you close the deal. 

 

End of Lease Agreement 

Leasing companies usually contact their customers some time before the lease agreement expires, in order to discuss when they will return the car. When you take the car back to the dealership, they will check the car’s mileage and condition, and ensure that it hasn’t been damaged in your care. It is always best to try and return the car in good condition (minus reasonable wear and tear) and to not exceed the agreed mileage. This precaution will save you from any surprise charges at the end of your lease. 

 

“I have no interest in appearing in the Billionaires list,” – Erich Sixt

 

The benefits of Short-term Car Lease 

Short-term car leasing or Long-term car rental is becoming more popular by the day, owing to the many advantages it offers. Not only can you save astronomical amounts of money, but “fleet management” services and associated services including service maintenance and repair, sale and lease-back, and salary sacrifice are also available [1].” 

 

 Here are some of the top benefits:

  1. Smaller commitment, offering great flexibility. These leases are highly useful for people who urgently need a vehicle for a temporary period of time. 
  2. Useful for both personal and business needs. 
  3. Wide range of car types and models available, giving you full variety to choose which car is best suited to your requirements. 
  4. Much cheaper than short-term rental costs. 
  5. You can achieve all the advantages of driving shiny, brand-new vehicles without having to purchase one. 
  6. Full manufacturer’s warranty and breakdown cover and included in the lease contract. 
  7. Some companies allow delivery within 48 hours in case you need your vehicle on an urgent basis. 
  8. You can potentially avoid service or repair work. If you time your contract properly, you can miss the major service intervals that come at larger miles, allowing you to save thousands. 
  9. There are no large down payments.
  10. You only need to pay fixed, low monthly rentals for the term of the rental agreement. 
  11. In some cases, unbranded logo vans are also available should you require them.

 

How Leasing Short-term Cars Works?

    • Fill out your details in a quote box when you find a deal that works for you. If you haven’t been able to find one, you can contact RAM Automotive for information on our latest deals.
    • Speak to the experts – they will go through your inquiry, and make sure you both are on the same page about the terms of the lease contracts. 
    • Complete a business credit check – most dealerships will double-check your finances and perform all necessary procedures before moving forward with the contract. 
    • Start making rentals – the dealership will process your account, and then you are free to reserve a car. 
    • Take delivery – once you have sealed the deal, the company will notify you of the expected delivery date. Your work is now over – you can lay back and wait for your shiny new car to arrive at your door! 

 

A Short-term Car Lease or Long Term Car Rental Could Be For You If…

  • You are a business owner who requires a short-term car for a worker whose employment is not permanent;
  • Your work requires you to change your car on a regular basis; 
  • You are temporarily in the UK and require a car for a limited period of time; 
  • You are a new start-up company; 
  • Your current vehicle is not suitable and you need a quick, short-term solution.

 

If You Think Short-term Car Leasing Is a Great Option for You, There are a Few Considerations  

When taking advantage of some fantastic short-term car lease deals, you also need to be aware of your obligations and responsibilities. Things can go wrong before, during, or after the rental, so make sure you protect yourself by reading our advice [2]. Here are a few things to consider when renting a car. 

 

  • You require a fully comprehensive insurance policy to cover the vehicle for the entire duration of the lease contract, be it 3, 6, or 12 months. 
  • You must return the vehicle with the decided amount of fuel. 
  • Most contracts do not permit you to smoke in the vehicle. 
  • You are not allowed to take the vehicle out of the UK without permission. 
  • You cannot make alterations to the vehicle; that is adding winter tyres or changing seating. 
  • You must return the vehicle in tip-top condition; any damage to the car may incur extra charges. 

 

Frequently Asked Questions

  • Can you lease a car for only 3 months?

Yes, most companies have great 3-month car lease offers, although they might not be available on every car leasing website. Browse vehicles on our website to explore what you can have tomorrow.

 

  • Can you lease a car for just one month?

It is not possible to lease a car for just one month, due to no leasing companies offering deals of this type. This would classify more as a short-term car rental and would be a better fit for a one-month need for a car. 

 

  • Can you lease a car for 2 months?

There are very few options to lease a car for 2 months. Long-term car rental offers a better alternative that is more affordable.

 

  • Do car dealerships do 6-month leases?

Car dealerships are not commonly known to offer car leases on a 6-month term. This would still be considered a Long term car rental. RAM Automotive offers exactly this, browse our website for your new car.

 

  • Is Road Tax included in the lease price?

Road tax is generally included in all lease prices for the duration of your lease agreement. Certain contracts may only include the first year’s road tax, but this is something the dealership will be open to discuss with you. 

 

Can my business lease a car?

Your business can lease a car, providing it is registered as one of the following: 

 

  • Limited Liability Partnership
  • PLC
  • Local Authority
  • Partnership
  • Limited Company
  • Charity
  • Embassy
  • Or if you are self-employed

 

What to do before the vehicle is returned?

As mentioned above, you must appraise the condition of your vehicle before it is due to be returned. This will help you identify any damage that does not constitute fair wear and tear, and doing this early will give you the time you need to repair the vehicle before you hand it in. It is also a good precaution to point out any wear or damage on the vehicle when you are collecting it. This allows you to lay a claim and avoid problems at the end of your lease. Here are some basic but necessary steps you should take when appraising your vehicle:

 

  1. Make sure that it has been washed and is thoroughly clean.
  2. Allow time for it to dry. Water on the paintwork can mask faults.
  3. Carry out the check-up in proper lighting, as your lease provider is likely to do the same. 
  4. Walk all the way around the vehicle and examine closely each panel, including the roof, bonnet, doors and body, for significant damage. 
  5. Observe where the light is reflected differently from any dents and scratches.
  6. Crouch down at the front and back end of the vehicle, looking along the bodyline. This helps you identify scratches or dents that you may have missed.
  7. Inspect lamps, lenses, windows, and mirrors for chips, cracks and holes.
  8. Check the tyres for damage. Check that the wear on the tread across each tyre is even. Inspect wheels, wheel trims, and wheel spokes for scratches and deterioration.
  9. Thoroughly clean the interior of the car, taking care to remove all your personal belongings.
  10. Check upholstered areas for odours, tears, burns, stains, and wear.
  11. Inspect all controls, including audio equipment and accessories – they should be present and fully functional.

 

Why do we have end-of-lease charges?

In case a dispute occurs about the condition of the vehicle when you are returning it, you have the right to pay for an examination of the car by an independent qualified engineer. This engineer will be agreed upon by both parties and will have no personal association with the dealership or with you. The engineer’s decision will be binding on both you and your short-term car lease provider. If the engineer finds it in your favour, the lease provider will have to refund the cost of the examination back to you. 

 

 

References: 

  1. New vehicle lease and fleet management services agreement. GOV.UK
    https://www.gov.uk/government/news/new-vehicle-lease-and-fleet-management-services-agreement
  1. Renting a car: what to look out for. GOV.UK
    https://www.dnrme.qld.gov.au/__data/assets/pdf_file/0010/1463779/efficient-irrigation-guideline.pdf