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5 reasons why your business can’t lease vehicles

Rather than paying for a vehicle upfront, leasing can seem like a simple solution to ensure your business doesn’t go into negative cash flow. But, sometimes, you may find that leasing them isn’t all that easy.

Here’s five reasons why your business can’t lease vehicles or could struggle sourcing finance to lease vehicles.

1. Recent startup

If you’ve only recently started up your company, there won’t be any visible record that proves you’re viable to lend finance to. Without any trading history or bank statements, mainstream lenders will most likely see your business as too risky. You’d need some form of accounts, ideally two years’ worth, though one can sometimes be acceptable.

2. Change of trading

If you recently altered the operational structure of your business – perhaps from a sole trader to a limited company, for example – this could prove troublesome. It will appear to some lenders as if you’re a startup again because you’ll have no information to demonstrate your business’ finances. This could potentially be solved by providing access to your previous business model’s accounts.

3. Low net worth

Often the vehicles that companies want to lease have a much larger worth than that of the business. It may be that the company’s actually doing quite well, but its finances are tied up in investments. A low net worth on paper unfortunately leads lenders to doubt whether you’ll be able to make your leasing repayments.

4. Current lender won’t lease more

You may find that you have hit your limit with your existing lender and that they won’t provide you with any more finance to lease further vehicles. This can pose quite the issue if your business is relying on additional cars or vans in order to grow.

5. Poor personal credit history

Both negative business and personal credit history can affect how risky lenders find you. And, unfortunately, they often focus on the creditworthiness of the director rather than the company. This means those who may have had past issues with finance are now having their business held back, even if it has a strong credit history.

This doesn’t always have to be an issue. With Your Car Choice, we have a selection of lenders who care about whether the business is creditworthy, rather than the individual.

Whether it’s a case of a poor director’s credit history or any of the other issues we’ve outlined above, we’ll take the time to understand your situation and work with you to get your funding.

Taking on credit is no small feat, so we’ll be with you every step of the way through the entire process. To discuss your circumstances and find a solution, get in contact with Your Car Choice today.

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