Business car leasing credit requirements

Interested in business car leasing? We talk you through the credit requirements...

If you are looking at getting a business car lease, then you may be wondering what sort of credit requirements you will need.

When you lease a car, regardless of whether you are leasing through a business or privately, you will have to go through a credit check. This is because the finance house you are leasing through will need to know that you can make the payments. And the best way to do this is to look at your credit history.

When you lease through your business, then the process is much of the same, except you will have to provide extra details. This is because the finance house will need to check the business’s credit history, and possibly the Directors as well.

So what are the business car leasing credit requirements? In this article, we look at the credit requirements you will need for business car leasing, and how to improve your business’s credit score.

Who qualifies for business car leasing?

Before we begin, who can get a business car lease? You qualify for business car leasing if you are;

  • A PLC
  • A Limited Liability Partnership
  • In a Partnership
  • A Local Authority
  • A Limited Company
  • Self-Employed
  • A Charity
  • A VAT registered business
  • An Embassy
workmen on a construction site standing on scaffolding with hard hats and hi visibility jackets on

So business leasing extends further than simply a Limited company.

What are the credit requirements for Business Car Leasing?

Unfortunately, getting a business car lease is not as simple as being a Limited Company or a PLC. You do have to go through a credit check and this means that you will have to meet certain requirements before you qualify for business leasing.

First and foremost, your business should have a good credit score. When you go through your credit check, it is an automated system that will simply look at the score and judge whether you qualify based on that. However, the finance house themselves might also look at your credit score, and they may require more information. Again, this is because they need to know that you are going to make the payments. If you are asked for more information, it will most likely be the following;

orange illustration of a credit card going into the machine with the title still worried about your credit score? Explore how leasing a car can improve it

You will need to provide bank statements that show a positive net worth, preferably from the last three months. You will also have to provide the addresses and identification of the Director/Directors. You will also be asked to provide an opening balance sheet if it is available. Your credit history should also show no CCJ’s.

If your business has a very strong credit score, then the chances are you will not be asked to provide most of the above, as the credit score will be enough to convince the finance house you can make the payments. However, you must be prepared to show the above.

What are the credit requirements for business car leasing for a new company?

If you are a new company, then it can be more difficult to get a business car lease. This is because your business won’t have much of a credit history, and therefore the finance house can’t guarantee you will make the monthly payments. However, it is not impossible.

In order to maximise your chances of getting a business car lease, you should be prepared to show the above. But you should also be prepared to go above and beyond. This means that you will need to show a plan to the finance house to prove that you can afford to make the payments. This might have to include a cash flow forecast, though this must be realistic, otherwise the finance house might not take it seriously and this could hamper your chances. The more you are willing to show the finance house, the more likely you are to convince them that you can make the monthly payments.

Can I get a business lease if I have bad credit?

If you personally have bad credit, but your business has a very strong credit score, then it may still be possible to obtain finance approval but this will depend on which finance house is used – there are a couple that we know of, that do not check Director’s details.

However, if your business has bad credit, then it could make things a bit more difficult. A credit check will be carried out on the Director or Directors. If you have a strong credit score, then the chances are the finance house will ask for a Director’s Personal Guarantee, or a DPG. This is where the Director promises that they will take on the monthly payments should the business fail to make them. This is an extra reassurance for the finance house and shows that the Director or Directors have confidence in their business.

Employees shaking hands celebrating rewards

If you can give a Director’s Guarantee, then this will greatly increase your chances of getting a business car lease.

It should be noted that if you are a new business, or if you have bad credit, then you may be asked to put down more initially. This alleviates the risk for the finance house. You might also not be able to get the best deal for you, because you are a higher risk to the finance house. If you are a new company, a start-up, or if you have bad credit, then we recommend you talk to an experienced vehicle broker before you apply for finance. They will be able to talk you through what you need to provide and will help you get the best deal for your circumstances.

Read more about van leasing with bad credit here

What does a business credit report show?

So what do the finance house look for when they check your credit score? What does a credit report show for your business?

A business credit report tells the finance house a lot about your company, including things such as;

  • Basic company information
    • This includes the company’s address and past addresses, suppliers and the number of years you have been trading
  • The history of the business
  • Government activity summary
  • Company operational data
  • Industry data
  • Past payment history
  • Business registration information
  • Any public filings
    • This includes judgements and legal filings

As you can see, your company credit report shows quite a bit and gives the finance house a good idea of whether your business will be able to make the monthly payments or not.

How can I improve my company credit score?

How do you improve your company’s credit score? There are a few ways you can do this, for example;

  • Paying all invoices on time
  • Avoid court judgments
    • If a court judgement does occur, ensure it is settled within a month
  • File annual returns and financial accounts on time
  • Register your business with a credit reference agency or directory
  • Check the credit position of your suppliers
    • This is to ensure that you won’t be left if one of them goes bust
  • Keep an eye on your credit score
    • This is so when the time comes that your business does need to undergo a credit check, you won’t be faced with any surprises.

In conclusion, when you apply for a business car lease, you will have to go through a credit check. This is so the finance house can be sure that you can make the monthly payments. If your company has a strong credit score, then you will have no problem qualifying for car finance. However, if your business’s credit score is not as good or you are a new company, then you will have to be prepared to prove to the finance house that you can make the monthly payments. You may also have to get a Director’s Guarantee, in which you will take on the monthly payments should your business fail to. This will reassure the finance house that the payments will be made. We work with businesses every day at OSV, and help businesses qualify for finance all the time. If you have any questions about the credit requirements for business leasing, then please do not hesitate to contact us.

Aware of the huge business benefits of leasing? Explore everything you need to  know today

Holly Martin

Content Co-ordinator at OSV Ltd
Holly enjoys: Reading, music and spending time with friends.

Within a week of Holly starting work at OSV she became an indispensable part of the marketing team. She's very intuitive and gets on with the whole office effortlessly.
Holly Martin

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