Long-term rental instead of buying a car?

Service Business

Leasing is still the most popular form of financing a company car. However, a serious competitor has appeared on the horizon - long-term rental. Until recently, such a solution could be used mainly by larger companies with a car fleet of more than 20 cars. Currently, on the Polish market, it is possible to rent a car long-term also by smaller companies.

How it's working?

CFM (Car Fleet Management), i.e. long-term car rental, works in a similar way to leasing. The company does not own the vehicle, but pays the rental company for the use of the vehicles on offer. The monthly fee agreed in the contract for such a service includes both the costs of renting the vehicle and its comprehensive service by a specialized external company. Therefore, the owner of the company does not have to worry about the issues related to the ongoing maintenance of the car, its servicing or insurance.

The big advantage of this solution is the fact that in the event of a car breakdown, the entrepreneur receives a replacement vehicle, which allows the company to operate smoothly. The main difference between leasing and long-term rental is that when choosing the second option, it is not possible to buy the car after the end of the contract. In the case of a rental, the car is simply returned to the owner at the end of the contract.

The benefits of such a solution are significant - first of all, as in the case of leasing, the entrepreneur has the right to include installments in tax-deductible costs or deduct VAT. In addition, in terms of logistics, he does not have to worry about the above. issues related to the use of the car. What's more, the costs of maintaining the car will not surprise the owner of the company - thanks to the fact that they are paid in the form of monthly installments specified in the contract, they become predictable. With this solution, the entrepreneur's creditworthiness does not change either.

Contrary to leasing, in the case of long-term rental, the entrepreneur may or may not make an initial payment. This means that in order to take advantage of the offer, he does not have to have any own contribution.

Now also for small businesses

CFM services have always been directed mainly to large enterprises, e.g. transport companies or employing many sales representatives. In the West, however, it is normal for small businesses to use long-term rentals. In Poland, it has only been possible recently, but it is an increasingly popular form of car rental for a company.

When deciding on such an offer, the entrepreneur must remember that his company can be checked in terms of its ability to pay the amounts due on time.A special verification process is used for this. This means that long-term rental, like a loan or leasing, will not be available to everyone.

Long-term car rental is certainly a convenient solution. Due to the additional services provided under the contract and the relatively low monthly installment price, it can become a strong competition for traditional forms of financing in small companies.