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How to Choose the Best Long Term Car Lease for Your Business

There are plenty of options to getting around by car in Romania without ever buying one. Car-sharing and driving services are changing the ways in which you can get around because nobody likes traffic jams and pollution.

For any business, either small, self employed, or even established companies, a long term car rental can be a cost-effective way of to improve efficiency without setting yourself up for a long-term investment & the costs associated with maintaining a car. 

Read along to find out more about why renting a car long term can benefit your business, what car rental programs are a fit for you & figure out if it’s a good idea to go for one!

What is a Long Term Rental?

A long term car rental (or business lease, as some rental companies name this service) is a business car hire service designed especially for those who are entrepreneurs, managers or self-employed.

This service can help you if you do not wish to invest in an asset, but you know your company would greatly benefit from having a car. Business rental services are offered on different terms by car rental companies, as well as car dealerships.

what is a long term car rental

Renting a car for the medium or long term is a smart solution for anyone who wants to have a car at hand without the added stress of growing rates or last-minute bookings.

Find a service that offers insurance and maintenance included in the monthly fee and leave car-related problem-solving on the hands of those trained to do it.

How Does a Business Car Lease Work?

Choosing to lease a car long term can help you save on the cost of business trips and day-to-day car journeys.

It works just like any other rental – you pay a fixed monthly price for your chosen car, with no advance payments or loans.

Some companies like Magrenta even offer included insurance, as well as taking the car for compulsory periodic checks or changing the tires for you. This means that you won’t waste any time these things and you’ll be able to focus on growing your project or achieving your business goals.

How Does a Business Car Lease Work

How long is a long term hire?

There is usually a minimum time for which you can rent a car long term.

A 2-month lease is often the shortest you can get for a medium-term hire service, while a 6-month lease is a minimum for a business car rental. The maximum time you can keep a car on rental ranges between 12 months for a medium-term and 4 years for a business lease.

Note that you will have to agree the lease period at the start of your contract and that it will influence your monthly rate. Usually, the longer you rent a car, the less you have to pay every month.

car-drive-long-term-rental

If you choose to renew your contract, you may be able to negotiate smaller rates, as the car will already have some mileage. However, keep in mind that it won’t always be possible to pick the same car. Rental companies tend to sell their cars before they get overused, which means that you’re always sure to get a fresh new car and keep up with the latest technology.

Where can you rent a car for business use?

Most car rental companies offer a long-term rental option besides their regular daily rates.

The differences are in the types of service they offer and the facilities included in the monthly rate. If you’re looking for a budget long term car rental, your best bet is to look for a local rental company, instead of the ones that you usually find at the airport.

 

Lease vs Rent: What’s the Difference?

Although both leasing and renting a car involve a monthly payment, there are different terms on which these agreements are made.

In the case of rental companies, a lease is the same thing as a rental. Car dealerships, on the other hand, offer several types of lease, so it’s important to know the difference. The main ones are hire purchase and contract hire.

lease or rent a car

What is a Hire Purchase?

Because the main business of car dealerships is selling cars, they will normally offer you the possibility of buying the car at the end of your lease contract. This is what is known as a hire purchase and you will have to establish your intention of buying the car when you sign the contract.

A hire purchase is essentially a type of installment purchase.

The company that leases the vehicle (lessor) remains the owner of the asset until you have paid the last installment and the residual value of the car. This represents the value of the car at the end of the contract and depends on how much the car has been used. 

What is a Hire Purchase

One important thing you should bear in mind when considering whether to rent or hire purchase a car is the depreciation cost.

If you choose to buy the car through a hire purchase, you can claim depreciation costs, meaning that you will have to pay a smaller residual value. However, in this case, all maintenance costs are supported by you, even though you are not yet the legal owner of the car.

When you rent a car, all depreciation and maintenance costs are supported by the rental company, which makes things a lot simpler.

What is a Contract Hire?

You can also lease a car from a dealership without having to buy it at the end of the contract. This is normally called a contract hire and it is similar to a long-term lease from a rental company.

If you’re not interested in buying the car, you need to know that the depreciation cost will be claimed by the leasing company as expenses, which can translate into higher monthly rates. A contract hire is normally signed for a minimum period of 24 months, while a business lease from a rental company can be as short as 2 months.

car-drive-rental-business

Should you lease, buy, or rent a car for your business?

There are many advantages to renting a car as opposed to owning one and more people seem to be moving towards the solutions proposed by the sharing economy. Car renting and sharing can help solve some of the problems encountered in most large cities, such as street congestion and air pollution.

Should you lease, buy, or rent a car for business

Here are some of the factors that you should have in mind when making a decision as to what is best for you between renting, leasing and buying:

1. Lease term length

Keep in mind that monthly rates for short-term leases of are more pricey in the case of new cars.

This is due to the fact that the residual value of the car goes down faster in the first 24 months of its life and the rates have to account for the depreciation cost.

2. Mileage

Whether you’re renting or leasing, bear in mind that you will have to agree on a mileage cap, so think about how much you will be using the car. This is an important factor when negotiating your monthly rates because it influences the depreciation in a car’s value.

long-distance-rental-car

Remember that going over the mileage limit can be pretty costly and might even be payable on a per-mile basis, so it’s better to renegotiate the terms if you know you’ll need to use the car more, rather than leaving it to the end of the contract.

3. Maintenance & insurance

As mentioned before, you will be liable for maintenance in the case of a hire-purchase, which means that you need to be prepared to cover any repair costs that might occur.

If you’re just renting the car, the company will cover these. At Magrenta, we even ensure that you have 24/7 road assistance, so you won’t be alone in case of an accident.

car rental insurance for accident road assistance

If you’re buying a car, you will be responsible for choosing whatever type of insurance you prefer, but in a lease or hire purchase, you may have to accept the lessor’s terms, given that they’re still the legal owners of the car. In the case of rentals, it’s recommended that you look for a company that offers insurance included in the monthly rate.

4. Other fees

You will also have to pay tax if you buy a car, so check national regulations on that. In the case of rentals, it might be included, but not all companies do this. Some may even offer you more – for instance, we even include road tax in the monthly rate.

When leasing or making a hire purchase, you usually have to make an advance payment equivalent to a three-month rate. While this isn’t the case for rentals, you normally have to pay a refundable deposit to rent a car.

documents-and costs for-business-rental

Dealerships could also add extra fees, such as an acquisition fee, extra dealer charges or a delivery fee if you’re expected to receive your car at home. Read the contract thoroughly to avoid any surprises.

5. Total cost of the car over the time you have it

Buying a car comes with the added burden of insurance, tax, and maintenance, and the latter can turn out pretty costly, especially if you’re planning on buying a second-hand car.

What’s more, the purchase of a brand new vehicle may not be a very good investment either. A new car’s first day is its worst, as its market value drops significantly after it leaves the dealership.

necessary documents business car hire

Consider how much you will be using the car and factor in all the taxes and fees that we’ve covered here. Ask about everything that’s included in the contract and don’t sign anything that will be a financial burden for you or your business.

The benefits of leasing a car through your business

Business rental terms differ between companies. In this section, we’ll tell you a bit about some of the services that we offer for business rentals to help entrepreneurs save on their rental costs.

This is what a value-for-money business rental looks like:

  • No advance payment
  • Included insurance (fixed cost)
  • Included tax and road taxes
  • 24/7 road assistance
  • Included maintenance and periodic checks
  • Insurance vehicle – in case something happens to your car, we’ll replace it a.s.a.p.
  • Included depreciation cost 

car rental for city business trips

The other thing you should know is that any rental costs that you incur through your company are 100% fiscally deductible (in line with Romanian regulations), which means that a business car rental is eligible as a business expense, a great advantage to have.

Check our comprehensive guide if you want to find out more about renting a car in Romania.

Is it better to have a personal lease or a business lease?

This is a question that is relevant to people who wish to make a hire purchase or lease a car from a dealership.

There are about six different ways that you can lease a car through your business or personally. These include a personal/business hire contract (effectively a car rental) and a personal/business contract purchase (equivalent to buying through a monthly plan).

how to long term lease a car

The difference between personal and business lease is that for a business lease through your firm, you can claim company expenses which can make it cheaper than a personal lease. However, you must be able to prove that the vehicle is used for a minimum of 50% of the time for business trips.

For rental companies, a personal lease usually means a short or medium term rental, while a business lease can be longer (over 12 months).

What do you need for a business car hire?

If you’re looking to rent a car long term from a rental company, the documents that you need for long-term rentals are the same as for standard services. You will need your ID and a valid driver’s license that you’ve had for at least 12 months.

Startup Stock Photos

Can I get a business car lease if I am self-employed?

Yes, you can.

It also doesn’t matter if your business is new. You will be the one personally signing the contract for the car that your company uses and you’ll receive a deductible fiscal invoice to serve your company’s financial records. Normally, you won’t need any statutory proof as to where you work in order to rent a car, but you should check with the company just in case.

Do I need to have a driver’s license for a business lease?

It’s assumed that you, the business owner or manager, will be the main user of the car, so yes, you do need a valid license.

Keep in mind that any additional drivers that will use the car need to be present when the contract is signed and that you may be charged an extra fee for each person.

business woman car hire order

Can I hire a car long term with no deposit?

Most rental companies will request that some kind of guarantee is provided as part of the rental agreement. While this usually means that you’ll have to put down a refundable deposit, some will also be happy to take a credit card.

Can I get a car lease with insurance included?

Not only can you get it, but it is also recommended that you rent a car long term with insurance included. Sometimes, you can get cheap insurance that you pay on the side, but more often than not, that turns out to be a bad deal.

Besides the extra time and effort that it will require from you, it may also become a hassle in case of an accident, with paperwork having to move from you to the rental company, to the insurer and so on. Your best option is to let the rental company deal with insurance.

Can I get a car lease or hire if I have bad credit?

A business car lease involves no credit check if you are getting a car from a rental company, only a routine internal check. When leasing from a dealership and especially on a hire purchase contract, the lessor is likely to ask for proof of your income as well as perform a credit check. Moreover, for business leases, the company through which you are leasing will also have to undergo a financial check.

credit check car rental

It’s important to note that most of the time, you can’t hire a car without a personal guarantee and this is relevant especially for business leases. This way, the rental company can make sure that the contract will be paid for even if the company through which you rented goes bankrupt.

What car should I choose for a long term rental?

There is no such thing as the best long term rental car because there is no one-size-fits-all formula. To pick a car that will serve your needs, think about what the primary use of the car will be.

car rental what is the best

Will you use it for short trips in the city, where size matters when it comes to finding a parking space? Then you’re probably going to benefit from driving a smaller car, such as a Ford Fiesta rental.

If you need a car that’s faster and comfortable for inter-city journeys, you can count on something like a Skoda Octavia rental. Some people even prefer to get a more spacious sedan, such as a Volkswagen Passat, because it provides extra space and safety for family journeys.

road-trip-rental-car

For longer trips and international journeys, we recommend a renting car that’s specially designed for this, such as an Audi A6 rental.

If you want to rent a car long term to travel around, have a look at our guide to road-tripping by rental car in Romania to find some inspiration!

How do I rent a car long term cheap?

Choosing to rent a car is a smart financial decision that can help you grow your business without blocking any of your capital in an asset. On top of that, we have a couple of tips that can help you minimize your car rental expenses and keep your finances in check.

You will likely find the best business car rental deals when you choose to rent for a longer term. As we already mentioned in this article, a car’s value drops most significantly in the first few months after it is sold, so shorter hires will be more expensive.

save money on business rentals

To further cut down on prices, consider less obvious brands when renting a car for a medium or long term. Bigger rental companies will charge more for standard services simply because they are renowned. In turn, local companies will push the prices lower to differentiate themselves.

Finally, we recommend that you avoid renting from airports if you want to get the best car rental program for your small business. The deals you will find at the airport generally oriented for customers interested in short-term leases. Also, many companies charge higher prices at their airport offices because they have to pay airport tax and car park rent.

Closing Thoughts

Whatever decision you make when hiring a car for a medium or long term, think of the benefits that a particular option can bring you. Instead of locking your capital in an asset, invest it a way that will help you grow your business in the long run. 

Don’t miss out on our medium and long term car rental deals & protect your business with the right car rental team!

best business car lease 2017

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