Company cars: what are the advantages for the company?
Company cars are among the benefits in kind granted to employees. However, they also have many advantages for companies, particularly in terms of taxation. It is important to choose your company vehicle(s) carefully, because the CO2 emission rate and the type of fuel used can influence taxes. Moreover, more and more companies are converting to electric. Long-term car rental solutions can also provide financial benefits for businesses.
Why acquire a leased company car?
Car leasing is a car financing system suitable for both individuals and professionals. It comes in three different formulas: LOA, LLD and leasing. Let’s see how this device works.
What is car leasing?
In the automotive sector, leasing is a financial product based on the rental of new or used cars for a specific period. Unlike conventional consumer credit, it is therefore not used to buy a vehicle. The beneficiary pays only a fraction of the value of the car chosen and used. This value is calculated according to the configuration of the car, the duration of the contract and the number of kilometers traveled. Other criteria such as warranty extension, maintenance and assistance are also taken into account in setting this value.
Everyone has the opportunity to finance their car with a leasing solution. In general, individuals opt for an LOA or an LLD. Professionals also have the right to choose these two options, but leasing is the leasing system most recommended to them. If you are interested in company car leasing in Luxembourg , for example, car dealerships offer offers that are perfectly suited to companies. Through interventions grouped together in one place, these services make their job easier while allowing them to save time and money.
The LOA or rental with option to purchase is the formula most popular with individuals. Professionals can also opt for this solution if they wish. The principle is simple: you choose the car you like and you specify the duration of the desired contract. The number of kilometers you plan to travel should also be included. The choice of car is based on your own criteria: finish, model, engine, etc. The duration can range from 24 to 60 months, while the number of kilometers can range from 10,000 to 120,000 km. If you wish, you can also set the amount of your contribution.
The amount of the monthly rent will be calculated on these criteria defined by the customer. The same applies to the residual value of the car at the end of the leasing contract. Residual value means the amount to be paid if you decide to keep the car at the end of the LOA. This is an option, but you can also return the vehicle to the lessor. You also have the possibility of renewing the contract with a new car, according to your wishes. In addition, the calculation of the amount of the rent also takes account of guarantees and possible maintenance costs . Either way, this amount remains the same throughout the duration of the contract.
The LLD or long-term rental is similar to the LOA. The criteria for setting the amount of rent are the same. It is also possible to add an extended warranty. However, this is a rental only. Thus, the car must be returned at the end of the contract .
Leasing is the professional version of LOA. Companies and professionals often opt for this leasing solution to finance their car fleet . The amount of the rent is calculated according to the duration of the commitment and the optional guarantees (third-party insurance, financial loss insurance, etc.).
The contribution can also influence this tariff, but it always remains optional. At the end of the contract, the lessee can pay the residual value if he wishes to become the owner of the car. His second choice is to return the property to the lessor.
Security deposit and rent payment
The security deposit is the contribution paid by the tenant in order to rent a vehicle with an option to buy . It corresponds to 30% of the price of the car. In addition, the rent is to be paid monthly or quarterly.
The benefits of car leasing
It is true that the amount of rent can sometimes be substantial if you include maintenance costs and guarantees . However, opting for car leasing is more economical than a simple conventional loan, because these maintenance costs are constantly increasing.
With whom to sign a leasing contract?
In a leasing contract, the lessor can be a financial organization or a car manufacturer . The contract must stipulate the identity of the two parties, the duration of the rental, the amount of the security deposit, the date of the first rent, the residual value, etc.