Leasing: a financing method for professionals
To put the subject into context for you business leasing is a financing method that enables companies to lease a business vehicle. There are three types of leasing available on the market:
- the Long-term rental
- the Lease to own
- the Medium-term rental
For more details, here are the characteristics of a professional lease:
- The professional leasing contract is aimed at all professionalswhatever their size or activity.
- This is a three-way contract between the company, the distributor and the leasing company.
- As mentioned above, at the end of the lease period, the company has three options:
- exercise the purchase option
- returning the vehicle
- renew the leasing contract
- The cost of professional leasing is made up of several items:
- monthly installments
- insurance
- security deposit
- maintenance contract
- any penalties
To find out more about the ins and outs of these different leasing contracts, as well as the mistakes not to make, this article is for you!
What is long-term leasing?
The Long-term leasingis a financing method that allows you to lease an electric car for a period of 12 to 60 months. The lessee pays only for the use of the vehicle, not for its purchase.
Today, fleet ownership is a necessity for many companies. To meet this need, some companies are opting for alternatives to purchasing electric vehicles to amortize their costs, which is why leasing has become a preferred option for many of them.
If you wish, a blog article written by us is available on how the amortization works.
LDD: how does it work?
The lessee takes out a contract with a lessor, usually a bank or leasing company. The lessor is the owner of the vehicle and the lessee is, as the name suggests, the lessee.
The contract provides for monthly rental payments. The amount of the rental depends on the make and model of the vehicle, the duration of the contract, the estimated mileage, and any additional services included in the contract. The contract may also be renewable.
For example, if you want to buy a Tesla Model Y on a business leasing contract, we can offer you :
- Prices start at €570/month
- 48-month long-term rental
- 10,000 km included
- No deposit
- Without 1ᵉʳ increased rent
If you would like to find out more about extending a long-term leasing contractit's all in this article!
Leasing can include additional services such as insurance, assistance, servicing, maintenance and extended warranties. These services are taken into account when calculating the monthly rental charge.
At the end of the contract, the lessee must return the vehicle to the lessor. The lessee can then take out a new long-term leasing contract for a new vehicle.
What are the advantages of long-term leasing?
The success of LLD comes from all the advantages it offers, which is why this type of contract is such a popular choice. Here are just a few reasons why:
- A controlled budget
Leasing enables companies to control the cost of owning a vehicle by fixing the rental amount in advance. This amount is determined by a number of factors, including :
- the price of the vehicle
- planned mileage
- the vehicle's residual value
- maintenance
- insurance
Among other things, companies don't have to worry about vehicle maintenance, repairs or resale.
If you would like to take out a professional leasing contract for this MG4we can offer you :
- Prices from €570/month
- 48-month long-term rental
- 10,000 km included
- No deposit
- Without 1ᵉʳ increased rent
- A wide choice of electric vehicles
Long-term leasing offers a wide choice of vehiclesof all makes and models. Companies can therefore choose the vehicle that best suits their needs.
We have also compiled a top 5 electric leased cars for professionalswhich could give you some ideas for your next leasing contract.
- Tax optimization
Lease payments are deductible from the company's operating expenses. This reduces taxable profit and preserves the company's borrowing capacity. For greater clarity, ownership of the vehicle remains with the leasing company or bank. Consequently, lease payments are not eligible for tax deductions.
What are the disadvantages of long-term leasing?
Although long-term leasing offers many advantages, it's important to be aware of its limitations before taking out a contract, to avoid unpleasant surprises. Here are just a few of them:
- Cancelling a leasing contract is costly
Once you've signed a leasing contract, you'll have to pay a cancellation fee. These charges can be high, depending on the contract. They are generally calculated on the basis of the remaining term of the contract, the mileage covered and the condition of the vehicle. In other words, termination fees can represent a significant proportion of the total cost of a leasing contract. That's why it's important to compare them carefully before signing up to a leasing contract.
- A long-term leasing contract requires rigorous maintenance
The leased vehicle must be maintained as if it were your own. This includes servicing, repairs and routine maintenance. In the event of damage, the leasing company may ask you to pay a reinstatement fee, even for minor damage. These costs can be high, depending on the severity of the damage.
- The mileage stipulated in a leasing contract must be respected
In a leasing contract, a monthly or annual mileage is defined in advance. This mileage must be respected, or you risk paying compensation for extra kilometers. These allowances are generally calculated on the basis of the price per extra kilometer. So, extra mileage allowances can be costly, especially if the vehicle is used for long journeys.
In short, long-term leasing is a financing solution with many advantages for businesses. However, it is important to understand the terms and conditions before signing a contract.
The best advice we can give you is to compare the different offers, and to draw up a personalized quote so that our Beev experts can advise you according to your needs. By following this advice, you'll be able to choose a leasing contract that suits your needs and your budget.
What is Lease to Own?
Lease to own: what is it?
The rental with purchase option (LOA), also known as leasing, is another financing solution that could potentially suit your company's needs. It gives you access to an electric car, with or without a down payment, for a period of 2 to 5 years, in return for monthly rental payments.
LOA: how does it work?
The LOA subscriber agrees to pay a monthly rental fee for the duration of the contract. In the event of non-payment, the lessor may terminate the contract and demand compensation, or even the return of the vehicle. The lessor is not obliged to reimburse any monthly payments already made.
At the end of the LOA contract, you have two options:
- Buy the vehicle: the professional becomes the owner of the vehicle by paying the purchase option.
- Returning the vehicle: the leasing company returns the security deposit to the professional, less any costs incurred.
As a reminder, as a professional, you are eligible for the ecological bonusbonus conversion bonusas well as regional grants for electric cars and a tax breaks for electric vehicles !
What are the advantages of LOA?
Leasing with a purchase option is a financing solution that meets the mobility needs of professionals. It gives you access to an electric vehicle without having to pay the full cost, while encouraging fleet renewal.
LOA offers a number of significant advantages for your vehicle fleet, including :
- Great flexibility
Thanks to LOAyou have the option of returning or buying back the vehicle at the end of the contract, allowing you to change cars regularly without having to worry about resale. What's more, this type of contract is not subject to a set mileage, so there are no penalties at the end of the contract. You also benefit from a 14-day right of withdrawal and no reconditioning charges at the end of the contract, compared with other professional leasing offers.
- A wide choice of electric vehicles
Like leasing, leasing offers a wide range of vehicles of all makes and models. As a professional, you can choose the vehicle that best meets your needs.
- Controlling your business portfolio
Monthly rents are fixed, as they are defined at the time of signing, allowing you to plan your expenses and manage your business portfolio.
For a clearer picture of the monthly rent in question, here are some important factors that influence it:
- The price of the base vehicle is the most important factor in calculating the rent. The more expensive the vehicle, the higher the rent.
- the longer the term of the contract, the lower the rent, thanks to the amortization of costs.
- The LOA contract: a cost-effective solution
The LOA can be a more economical solution than a car loan, as it generally includes extended warranty and maintenance. These services are often essential to cover the risks and costs of owning a vehicle.
With a car loan, extended warranties and maintenance are separate contracts from the vehicle. LOA, on the other hand, includes them in the lease price, simplifying financial management.
The LOA offers a more global vision of mobility, by integrating maintenance and insurance into the lease price. This approach can be more advantageous for drivers looking for a simple, no-surprise solution.
What are the disadvantages of LOA?
Although the LOA has many advantages, there are a few important negative points to be aware of before opting for this type of contract. These include
- High interest rates
This interest is included in the rent. In fact, the annualized percentage rate (APR) of the monthly payments is higher than that of a conventional car loan.conventional car loan. If the electric vehicle is not purchased, the credit is more expensive than a full-lease contract.
- Relatively high total cost of ownership
Buying an electric vehicle under a LOA can be expensive, even if the lease payments are lower than the monthly installments for a car loan. The amount disbursed at the end of the contract is often higher if the purchase option is exercised.
What's more, you run the risk of having to continue paying rent in the event of theft or destruction of the vehicle, unless you take out insurance to cover these risks.
In other words, LOA can be an interesting solution for professionals who need electric vehicles on a regular basis, for example to replace a service vehicle or to renew their vehicle fleet. It can also be an interesting solution for professionals who wish to benefit from an electric vehicle without having to assume the full cost.
It's important to note that the LOA is a leasing contract, not a sales contract. This means that the professional does not become the owner of the vehicle at the end of the contract, unless he or she decides to purchase it.
For more information, see our article on Leasing an electric car may be of interest to you.
How does Medium-Term Rental work?
The Location Moyenne Durée or LMD, is a vehicle leasing contract that offers great flexibility. It enables contract holders to have a vehicle at their disposal for a few weeks or months, without having to commit to several years.
As a reminder, as a professional, you are eligible for the ecological bonusbonus conversion bonusas well as regional grants for electric cars and a tax breaks for electric vehicles !
The LMD has the following features:
- Duration: 1 to 24 months, renewable
- Mileage : fixed
- Services included: repairs, comprehensive insurance, periodic maintenance and assistance
- Rent : fixed and known in advance
The LMD is aimed at customers who want a vehicle for a few weeks or months, without committing to several years. It is particularly well suited to professionals who need to respond quickly to a peak in activity, or to provide a vehicle for an employee on probation.
Setting up a medium-term rental contract
As with full service leasing, the set-up of a LMD contract is similar. The customer chooses the vehicle they want, then customizes their choice according to their needs. The purchase price of the vehicle is used as the basis for pricing the service.
The customer then defines the terms and conditions of the contract with the lessor, such as the rental period, annual mileage and services included. It's important to note that the LMD is a non-binding contract, which means that the customer is not obliged to return the vehicle on a specific date.
If you would like to purchase a Renault Zoe e-Tech on a medium-term business lease, here are the specifications:
- From €435/month
- 24-month long-term rental
- 20,000 km included
- No deposit
- Without 1ᵉʳ increased rent
The price of an LMD depends on the provider. You can get the best price on the market by doing some serious research. A good solution is to ask for quotes online to access comparable offers. Naturally, Beev offers you the best prices for LMD !
In this article, you'll find 5 good reasons to take out an LMD contract as a professional !
What's the difference between LMD and LLD?
Although the two formulas have many similarities, it's not just the length of the contract that differs:
| Commitment | Cost | Duration |
|---|---|---|
|
LLD is a formula with a commitment over several years. The LMD is a no-commitment formula. |
the total cost of leasing is generally lower than that of leasing, as costs are amortized over a longer period. |
Of course, LLD is a long-term rental formula, with a term of between 24 and 60 months. The LMD is a medium-term rental formula, with a renewable term of between 1 and 24 months. |
What are the advantages of LMD?
The LMD is a vehicle rental solution that offers many advantages for professionals.
- Flexibility: meeting electric mobility needs
The LMD allows companies to have a vehicle at their disposal for short periods. This offers a degree of flexibility to companies wishing to adapt their mobility to their needs.
- Sérénité: a headache-free leasing contract
This type of leasing contract includes maintenance, insurance and assistance services. This allows companies to worry only about the maintenance of their business vehicles. To illustrate my point, a company can take out a LMD to have recent vehicles in good condition, without having to worry about repairs or insurance.
- Cost: a low-cost electric vehicle
The cost of the LMD is generally lower than that of an electric vehicle. electric vehicle. In fact, when you buy an electric vehicle, you have to pay a substantial sum to acquire the vehicle. With the LMD, on the other hand, you don't pay the full cost of the vehicle. You only pay the monthly lease instalments, which reduces the initial financial burden. This represents a financial advantage for companies wishing to have an electric car at their disposal for a short period. For example, a company can take out a LMD for an electric car without having to make a multi-year commitment.
- Limited investment
The purchase of an electric vehicle represents a major investment for a company. The purchase price of an electric vehicle can vary according to model, engine, options and make. Its cost can represent a significant burden on a company's finances, especially for small businesses or start-ups.
The LMD allows companies to have an electric vehicle without having to invest a large sum, as previously stated. What's more, this type of leasing contract does not require a personal contribution.
- Risk reduction
Owning an electric vehicle is associated with a number of risks, such as wear and tear, repairs and breakdowns. Wear and tear is a natural phenomenon that can reduce the value of a vehicle. Repairs and breakdown services can be costly, especially for newer electric vehicles.
Reducing risk is essential for any business looking to cut fleet costs. With the LMD, the lessor is responsible for vehicle maintenance and repair, enabling companies to concentrate on their business without having to worry about the condition of the vehicle.
- Optimizing cash flow
The purchase of an electric vehicle represents a capital investment for a company. This means that the purchase price of the vehicle is an investment that does not generate immediate income. The LMD, and even a leasing contract in general, enable companies to optimize their cash flow by not having to pay the purchase price of a vehicle.
What are the disadvantages of LMD?
- Higher cost than leasing
For companies wishing to lease several vehicles at the same time, the LMD is generally more expensive than the Location Longue Durée (LLD). The LMD is a non-binding contract, which represents a risk for the lessor. To cover this risk, the lessor charges a higher price than for long-term leasing.
- Maintenance and repair costs
These costs are borne by the lessee if an all-inclusive package is not taken out. Similarly, if you wish to return your electric vehicle at the end of your contract, the maintenance costs are your responsibility.
Although subscribing to an LMD contract for your electric fleet contract for your company's electric fleet has many advantages, it's essential to have sufficient visibility and to know all the terms and conditions.
For a broader view of medium-term leasing, don't hesitate to read our article on Medium-term leasing for electric cars.
What are the mistakes to avoid when leasing electric cars for your company?
When it comes to leasing your fleet of electric vehicles for business purposes, it's important to do your homework before signing up to a particular contract. In this section, we'll look at the common mistakes to avoid, to ensure that the leasing offer is tailored to your company's needs and portfolio.
Mistake 1: Not comparing offers
There are many electric car leasing companies, and offers vary considerably in terms of price, conditions and services. So it's important to compare offers before making a decision.
Which criteria to compare?
- Monthly rent
- Flat-rate mileage
- Restoration costs
- Services included (insurance, maintenance, assistance)
- Contract duration
Mistake 2: Ignoring your needs
When leasing electric cars for your company, it's important to evaluate certain factors carefully to ensure that the electric car leasing contract is the right fit for your business.
- Mileage
This point is crucial, as it determines the leasing price. It's important to choose a mileage package that corresponds to the real needs of your employees. If you exceed the fixed mileage, you'll have to pay additional charges.
- Services
The services included in the leasing contract vary from one supplier to another. It's important to choose a contract that includes the services you need, such as insurance, maintenance and assistance.
- Contract duration
The term of the leasing contract is also important to consider. It's important to choose a term that suits your needs. If you choose too short a term, you'll have to pay termination fees.
Here are some examples of questions to ask yourself:
→ What is the average annual mileage of my employees?
→ Do I need comprehensive or third-party insurance?
→ Do I need a maintenance contract?
→ How long do I need an electric car for?
Mistake 3: Not reading the contract
Before signing a leasing contract for your company, it's important to read all the terms and conditions carefully. These conditions are valid for the entire duration of the contract and cannot be modified.
Some leasing contracts include additional services, such as insurance and maintenance. These services cannot be modified or withdrawn during the term of the contract.
It's important to understand the terms and conditions of your insurance policy, because some insurance companies don't cover all long-term leases. What's more, some maintenance contracts do not cover all costs, such as tires, wiper blades or brake pads.
If you have any questions or doubts about a leasing contract, you can ask a professional to help you. You also have a 14-day cooling-off period after signing the contract.
Mistake 4: Not calling in a professional
To save time and money, we strongly advise you to use the services of a professional car leasing company. These professionals can call on their network of partners to offer you the best deals on the market. They can also explain the pitfalls to be avoided when taking out a lease. At Beev, our electric car experts will help you make the right leasing choices and offer you the best deal at the best price.
Error 5: Underestimating your annual mileage
To reduce fleet costs, some professionals opt for the lowest possible mileage package. However, you need to be aware that if actual mileage exceeds the flat rate, you'll have to pay penalties. These penalties average between 5 and 20 cents per extra kilometer, depending on the terms of the contract.
That's why it's important to accurately assess your annual mileage before taking out a leasing contract. It is very difficult, if not impossible, to renegotiate the mileage package during the term of the contract.
Mistake 6: Not maintaining the car during the leasing period
The condition of the leased vehicle is important. You need to take good care of it to avoid being billed for its restoration at the end of the contract. Even minor damage can be costly. So it's a good idea to have scratches, broken lights or chipped paint repaired before you return the car.
If the damage is extensive, it's best to take out insurance, even if you have to pay the deductible.
At the end of a leasing contract, for example, the vehicle must be returned clean inside and out. If this is not the case, the lessor may charge a cleaning fee. It can be difficult to keep the interior clean, especially with children or pets. So it's important to make a regular effort to avoid unexpected costs.
Here are some tips on how to clean your car properly:
- Vacuum at least once a fortnight.
- Clean surfaces with a damp cloth.
- Remove dirt from seats and windows.
- Let the vehicle air dry.
The different electric car leasing contracts for your company: conclusion
Leasing electric cars is an interesting solution for companies wishing to have high-performance vehicles adapted to their needs, without having to assume ownership in most cases. However, it's important to be well informed before signing a leasing contract, to avoid costly mistakes.
At Beev, where the best prices are negotiated, take advantage of support every step of the way from our electric vehicle experts.
