Financial leasing for the self-employed: how does it work and what are the benefits?
As a self-employed person, you may be looking for the best way to finance your company car. A finance lease is a good option here. But how exactly does it work? And what are the benefits? In this blog, you can read more about the benefits of a finance lease for self-employed people.
How does financial lease work?
A finance lease is a form of financing whereby, as a self-employed person, you pay for the company car in instalments but are able to use it straight away. You immediately become the economic owner of the vehicle, whilst the leasing company remains the legal owner for the duration of the lease contract.
In addition to the deposit, you pay a fixed monthly amount, which is usually lower than with a traditional loan. The lease agreement ends once the purchase price of the car has been paid off in full.
Benefits of financial lease
A finance lease offers self-employed people a number of advantages. Firstly, with a finance lease, you become the owner of the company car at the end of the term. Secondly, you don’t have to make a large upfront investment and can spread the purchase price over a number of months.
Finally, a finance lease offers tax advantages. The interest you pay on the finance lease is deductible from your VAT, meaning you pay less tax.
Financing a company car as a self-employed person
With this type of financing, you know exactly where you stand, as you make fixed monthly repayments on the loan. It is also possible to adjust the term and repayment schedule to suit your own financial situation.
Conclusion
As a self-employed person, financing a company car is an important decision. A finance lease offers a number of advantages, such as lower payments over the term of the lease and immediate use of the company car. It is also possible to take out an interest-free loan if you wish to finance the company car.
In both cases, you know exactly where you stand, which makes it an attractive financing option for the self-employed.