What exactly can you use a leased car for? Turns out quite a few things, but here are a few things to keep in mind.
There are very few things you can’t use a leased car for. At the end of the day, it’s really just like any other normal vehicle, save for the fact that it’s on a contract and you don’t own it outright. So, while you may need a couple more things in place for certain situations (which we’ll cover below), know that you can hit the road confidently with your trustee new steed (er, car).
Here are some common questions drivers often have about leasing a vehicle.
Can I put a leased car through my business?
If you’re a small business owner, then you may be wondering if you can lease a car through your business. The answer is that you can. In fact, it’s completely up to you – you can either lease your car through your limited company or take it out as a personal lease.
You can also have a business lease for a regulated partnership or as a sole trader. The best choice will depend on your own circumstances. If you’re looking to save on VAT, then leasing the car through your company will probably make the most sense, however you must be VAT registered to claim back any VAT.
Can I take a leased car abroad?
One of the most common questions we get is whether you can drive a leased car abroad. The great news is you can. So, pack up the car – you’re going to the beach after all!
All you need to do is to make sure you’ve got the right paperwork to hand. While car owners will need their V5, car leasers will need to request:
- A VE103 or Vehicle on Hire form, and
- A letter of authorisation – this gives you permission to take your car outside the UK
You can get these easily from your finance company, and it’s worth doing so if you want to avoid any travel headaches. You’ll also need to make sure you’ve got the right kind of insurance coverage for going abroad (oh, and don’t forget that U.K. driving license!).
Most leasing companies put a restriction of 90 days abroad per year so if you are close to that bracket be sure to clarify beforehand.
For more information, read Rivervale’s helpful guide on taking your leased car out-of-country.
Can I use my leased car to secure a personal loan?
While you might have been able to use a car you bought as collateral, you can’t use a leased car to secure a personal loan as it’s not an asset you own outright.
Can I use a leased car as a taxi?
Unfortunately, this one’s a bit tricky. If you’re looking to lease a car in order to drive it as a taxi, you’ll likely need to find a company that already specialises in leasing taxis.
Taxi driving involves a lot of wear and tear, as well as additional mileage which results in quicker vehicle depreciation (the amount by which a vehicle loses value). As such, most finance companies won’t offer this as an option.
Can I use a leased car to drive for Uber?
Sorry to dash those Uber-driving dreams, but the answer here is similar to the one before. If you’re looking to use a car as a taxi, even if it’s to drive for Uber, it will be difficult to get a lease for this. And while Uber has partnered up with a leasing company in the States to provide this very service, it doesn’t look like this will be brought over to the UK anytime soon.
Leasing companies don’t allow their cars to be used for anything to with what is deemed use for ‘hire or reward’.
Can I use a leased car as a trade-in?
While trading in a car on loan with an outstanding balance may be common practice, you can’t trade in a leased car before the lease is up. In fact, there may be penalties for backing out of your contract early.
Can I let someone else drive my leased car?
You might believe that as the person paying, you’re the only one that’s allowed to drive your leased car. In reality, you can actually let someone else drive or borrow your car – that is, as long as you’ve given your explicit permission (no re-creating the joy riding scene from Ferris Bueller’s Day Off!).
They’ll also need their own insurance. At the end of the day, your leased car is still an investment, so make sure you trust the person driving (that probably rules out your 18-year-old cousin who’s yet to pass their driver’s test).
Our advice is make sure that any third party use has the express permission of the hirer and the driver is fully comprehensively insured.
Get in touch with Rivervale if you want to discuss new vehicle leases, or visit our car leasing website if you have more questions about whether car leasing is the right option for you.
This article was originally published on the Rivervale Leasing blog