# Car hire for SMEs: Things to consider Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2016-09-17 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Benefits of Long Term Car Hire for SMEs Explained Meta Description: Discover the advantages of long term car hire for SMEs, including cost efficiency, tax benefits, and hassle-free maintenance. Find out more here! URL: https://financedigest.com/car-hire-for-smes-things-to-considerhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/teenagers-with-carbkxha8ar-1736844507765-compressed.jpg) There is a growing trend in the number of SMEs choosing to hire cars long term instead of purchasing them outright.  With a large number of benefits for SMEs associated with long term car hire, it’s easy to see the draw. “You get the flexibility of low cost car hire without the penalties and costs that are associated with a long term lease,” explains Simon Howard, Managing Director of [Norwich car hire](http://www.firstselfdrive.co.uk/) company, First Self Drive. Leasing usually works by businesses hiring a car for a fixed amount of time and making monthly payments for the duration of the higher.  At the [end of the agreed period](https://www.financedigest.com/according-to-the-recently-published-report-by-persistence-market-research-the-global-market-for-gene-expression-analysis-will-reflect-a-steady-growth-during-the-forecast-period-2017-2022-by-the-end.html "According to the recently-published report by Persistence Market Research, the global market for gene expression analysis will reflect a steady growth during the forecast period, 2017-2022. By the end of 2022"), you can give the car back, trade it in for a newer model or re-negotiate on a new leasing term for the same car. Rental companies will take some of the risk out of owning a [car by arranging various aspects such as maintenance and breakdown cover](https://www.financedigest.com/understanding-the-different-types-of-car-insurance-covers.html "Understanding The Different Types Of Car Insurance Covers").  In fact, you can often expect all maintenance costs to be included. Having your car [serviced without the fear of hugely expensive repair bills is an added weight off the shoulders of SMEs looking to lease and it puts the responsibility to make the vehicle roadworthy back](https://www.financedigest.com/tesco-says-online-services-back-up-after-interference-attempt.html "Tesco says online services back up after interference ‘attempt’") on to the rental company. Cost is naturally a [key factor](https://www.financedigest.com/egg-incubator-market-extensive-analysis-of-key-segments-of-the-industry-and-emerging-growth-factors-with-current-trends-and-future-estimations.html "Egg Incubator Market: Extensive Analysis Of Key Segments Of The Industry And Emerging Growth Factors With Current Trends And Future Estimations") in the decision making process for all SMEs. For those smaller [businesses that do not have a lot of capital or who only need](https://www.financedigest.com/why-businesses-need-to-shift-their-e-invoicing-approach-from-local-and-tactical-to-scalable-and-strategic.html "Why businesses need to shift their e-invoicing approach – from local and tactical to scalable and strategic") a car for occasional use, then hiring a car is a viable option.The added advantage with this is that some operators offer a dedicated [business service](https://www.financedigest.com/more-companies-investing-heavily-in-business-services-software.html "More Companies Investing Heavily In Business Services Software") to deliver and collect the car from your office premises. Many [companies that do have the budget for a car often decide not to purchase a vehicle because it ties up capital in assets](https://www.financedigest.com/why-it-pays-for-companies-to-hold-physical-assets-in-separate-limited-companies.html "Why it pays for companies to hold physical assets in separate limited companies"), which could be better used growing their business.Add to this the [fact that cars can quickly depreciate in value](https://www.financedigest.com/doppler-ultrasound-market-value-projected-to-expand-during-2021-2031-fact-mr-report.html "Doppler Ultrasound Market Value Projected to Expand during 2021-2031: Fact.MR Report") and take away the hassle of having to sell the car when you are finished with it, and car leasing becomes an even more attractive option.  Some car rental [firms also will offer longer-term rental options without the finance](https://www.financedigest.com/prioritising-employee-wellbeing-in-finance-firms-through-learning-and-development.html "Prioritising employee wellbeing in finance firms through learning and development") charges that are incurred with leasing arrangements. Leasing a car is also very tax efficient for VAT registered [businesses since](https://www.financedigest.com/ukraine-war-energy-crisis-send-german-business-sentiment-to-lowest-level-since-june-2020.html "Ukraine war, energy crisis send German business sentiment to lowest level since June 2020") companies are able to offset a percentage of the cost of the monthly rental against corporation or income tax. This amount is based on the CO2 emissions of the rental [car and for vehicles](https://www.financedigest.com/analysis-when-do-electric-vehicles-become-cleaner-than-gasoline-cars.html "Analysis: When do electric vehicles become cleaner than gasoline cars?") that are very efficient, it could be up to 100%. How much you pay each month will depend on many different factors. For example, the more expensive the car, the [higher the monthly lease is likely to cost](https://www.financedigest.com/ds-smith-says-cardboard-box-volumes-strong-flags-higher-costs.html "DS Smith says cardboard box volumes strong; flags higher costs"). How many miles you expect to be [driving the car](https://www.financedigest.com/car-sharing-industry-revs-up-with-wembley-park-residents-in-the-driving-seat.html "Car sharing industry revs up with Wembley Park residents in the driving seat") is also another important point to consider. Your leasing agreement will include a mileage limit so it is a good idea to [decide on a realistic figure and to keep](https://www.financedigest.com/belgian-court-decides-to-keep-eu-corruption-case-suspect-in-detention.html "Belgian court decides to keep EU corruption case suspect in detention") it in mind that you will be charged for each mile you go over this limit. Renting a car can certainly make financial sense, but how do you [know if it is right for your business](https://www.financedigest.com/the-four-pillars-of-data-integrity-what-finance-businesses-need-to-know.html "The four pillars of data integrity: what finance businesses need to know")?  When choosing your car hire company and the vehicle you want to hire, it is important to do your [research into what is available and set](https://www.financedigest.com/cellulite-treatment-market-size-is-set-to-experience-revolutionary-growth-by-2026-transparency-market-research.html "Cellulite Treatment Market Size is Set to Experience Revolutionary Growth by 2026 | Transparency Market Research") yourself a realistic and sensible budget.  Make sure you know the answers to these questions before you make any firm decisions: - What is the lease going to [cost each month and is it within budget](https://www.financedigest.com/ireland-dips-into-budget-surplus-to-ease-cost-of-living-squeeze.html "Ireland dips into budget surplus to ease cost of living squeeze")? - What are you using the car for? Is the vehicle fit for purpose? - Is there a mileage limit and is it appropriate for how much you are [expecting to drive](https://www.financedigest.com/polyurethane-dispersion-market-globally-expected-to-drive-growth-through-2031.html "Polyurethane Dispersion Market Globally Expected to Drive Growth through 2031")? - What cover do you get? - How efficient is the car? - How much of the rental can you offset against tax? --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---