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If you’re a sole trader then your business is slightly different to other types of businesses, as it only exists as a trading medium. This means that legally there is no difference between yourself and the company.  

You can take a look at our guide to applying for a lease as a business here if you are not a sole trader. Or for a more general overview of business leasing take a look at this guide.

Applying for Finance as a Sole Trader

Applying for finance as a sole trader is the same process as applying for finance as any other business. Just scroll down to the Application Process Section to see a full breakdown of how this works.

Want to see if you’re eligible for business finance? Take a look at the quiz on this page.

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Benefits of Leasing

There are a lot of benefits to leasing a vehicle rather than buying it outright as a sole trader.

A lease has fixed monthly payments making it easier for you to budget and manage your cashflow. This is especially the case if you decide to opt for a maintenance package on the lease as well, as you will not get any unexpected servicing or maintenance bills.

You decide on the terms of the lease so you can choose the length of the contract and the annual mileage allowance that is right for you. You can also decide if you want to pay a lower initial rental or a larger one to reduce the following monthly payments.

If you are VAT registered you will be able to claim back some of the VAT, as businesses can claim up to 50% VAT back on cars that are used for personal use as well. For vans this increases to 100%.

All of our lease vehicles are new, so will have the full manufacturer’s warranty, which depending on the length of your lease may cover you for the duration. If your lease is for less than three years, then you will not have to worry about the MOT either.

Your finance company is the owner of the vehicle, so you don’t need to worry about the value of it depreciating. It also means that the vehicle itself is an off balance sheet asset. 

As the funder is the owner of the vehicle they will pay the road tax for the duration of the lease.

If you lease a vehicle as a sole trader then you will not need to pay company car tax as you are trading as the business rather than working for one.

Other Things to Consider:

Insurance:

It will be your responsibility to arrange fully comprehensive insurance for the vehicle.

Servicing and Maintenance:

You might decide to opt for a maintained lease, and if you do then you’ll just need to ring the contact number provided by your funder to arrange any servicing or maintenance.

If you decide against adding a maintenance package to your lease agreement, then it will be your responsibility to arrange servicing in line with the manufacturer and funder’s guidelines. You will also be responsible for any maintenance work required on the vehicle.

Fair Wear and Tear:

It’s important to remember that with a lease car you have to hand the vehicle back at the end of the lease. For more information on this just scroll down to our Fair Wear and Tear section.

Personal vs Business:

If you are applying for lease finance as a sole trader, then you might want to consider if it is best to apply for a personal lease or business lease. There are a number of factors that you will need to consider when deciding which option is right for you. For example if your business has not been trading for long it might be easier to be approved for a personal lease. Take a look at our Guide to Personal Leasing to see if this would be the better option for you.

The Application Process:

As part of the application process we will need some information from you about yourself and the business. We will ask you to complete a proposal form with all the required information, but we’ve included a list of information we will need below for you.  

Details of the Business:

  • The full business name
  • The registered company address
  • Your contact details for us to get in touch
  • The type of business – if you’re on this page this probably be a sole trader
  • The annual turnover
  • The date the business was established
  • The registered company number and VAT number if applicable
  • The nature of the business
  • Full bank details, including your bank name and address as well as your account details and how long you've been with them

Details of the Owner:

  • Title
  • Full name
  • Email Address
  • Date of birth
  • Marital Status
  • Number of dependents
  • Address history (usually for the last 3 years but we might request them for longer depending on the funder)
  • Property status (owned, rented)

Please note that as part of the application process a credit check will be carried out. You might also be asked to provide proof of the business’ income, which could be in the form of the latest accounts, recent bank statements and proof of address or ID for yourself.

As well as your finance application the funder may consider:

  • How long the business has been trading for
  • The annual turnover of the business
  • If you file accounts and meet the deadlines for this
  • Public records including court judgements, bankruptcies and insolvency
  • Details of any previous credit searches
  • They could also consider your personal finances, but this will usually be a soft search
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Signage:

It’s important for businesses to promote their brand.

A lot of businesses choose to have signage on their vehicles, whether it’s a car or van, to advertise the company.

You can still apply sign writing to a lease vehicle, but you must make sure that this is removed before you return the vehicle and there cannot be any damage caused by it.

Fair Wear and Tear:

With a lease vehicle you have to give the vehicle back to the lease company at the end of your contract. It is important for you to consider this when deciding if a lease is the right choice for your business vehicle.

All funders have guidelines as to what condition the vehicle should be returned to them in, which are based on the BVRLA’s guidelines. 

These guidelines cover everything from sign writing, the mechanical, interior and exterior condition and documentation for the vehicle.

You can take a look at the full guidelines below:

BVRLA Fair Wear and Tear Guidelines

If you have any more questions about leasing as a sole trader then just give us a call on 03302210000 and one of our Leasing Consultants will be happy to help.

Peace Of Mind

Check out one of our helpful guides or our explaination of leasing to get all your questions answered.

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