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.
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.
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.
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.
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.
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.
When applying for a business lease, you generally need to provide the following information:
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 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:
There are many benefits of personal car leasing, some of which include:
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.
£325+VAT per month
2k mileage limit per month
£358 + VAT per month
1.5k mileage limit per month
£390+ VAT per month
1k Mileage limit per month
£425+VAT per month
1k mileage limit per month
£390 +VAT per month
1.2K mileage limit per month
£460+VAT per month
1.2 mileage limit per month
£599 + VAT per month
mileage limit per month
£520 + VAT per month
1k Mileage limit per month
£410 + VAT per month
1k mileage limit per month
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.
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.
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 .”
Here are some of the top benefits:
How Leasing Short-term Cars Works?
A Short-term Car Lease or Long Term Car Rental Could Be For You If…
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 . Here are a few things to consider when renting a car.
Frequently Asked Questions
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.
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.
There are very few options to lease a car for 2 months. Long-term car rental offers a better alternative that is more affordable.
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.
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.
Your business can lease a car, providing it is registered as one of the following:
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:
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.