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Business car leasing credit requirements

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

  • Who qualifies for business leasing?
  • What are the credit requirements for business leasing?
  • What does a credit report show?
  • How can I improve my company credit score?

If you’re doing research into getting a business car lease, then it’s likely you’re thinking about what sort of credit requirements you’ll need to meet in order to qualify.

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 providing the funding for your lease will need to know that you can make the payments. The best way to do this is for them to take a look at your credit history.

When you lease through your business, the process is very similar, though you will need to provide further details as the Finance House will need to look into the business’s credit history. Depending on the results of this they may also need to check the company director’s finance history too.

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

Who qualifies for business car leasing?

Before we begin, do you qualify to get a business car lease?

You qualify for business car leasing if you are:

  • A public limited company (PLC)
  • A Limited Liability Partnership (LLP)
  • In a partnership
  • A local authority
  • A limited company
  • A self-employed sole trader
  • A charity
  • A VAT registered business
  • An embassy

So, if you’re considering business car leasing then, as you can see, it’s not only for your business if you’re a limited company.

Have questions about the different finance options available? Download our Ultimate Guide to Leasing.

What are the credit requirements for Business Car Leasing?

Getting a business car lease is not as simple as just being a PLC or a sole trader. You still have to go through a credit check. This means that you will need to meet certain requirements before you qualify for business leasing.

First and foremost, your business needs to have a good credit score. A credit check is carried out by an automated system that will simply look at your score and judge whether you qualify for the finance you are applying for based on that piece of information. However, the Finance House may also look at your credit score after the check has been completed and request more information.

Business leasing credit requirements - woman in car working on laptop

This might be because they need reassurance that you are going to be able to meet the payments.

If you are asked to provide more information then it is likely to be some (or all) of the following:

  • Bank statements that show a positive net worth, likely from the previous three months
  • Valid addresses and identification of the company director(s)
  • An opening balance sheet – if available

It’s also worth being aware that there should be no county court judgements (CCJs) on your credit history.

If the credit score for your business is very strong, then chances are you won’t be asked to provide any further information as the credit score will be enough to convince the Finance House that your company will be able to make the monthly payments. However, you should be prepared to show the evidence if it is requested.

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

If your company is still new, then it’s a little more difficult to get approval for a business car lease. This is due to the fact that your business won’t have a very long credit history – if any at all. Because of this, the Finance House has very little reassurance that you will be able to meet the regular monthly payments. However, it’s not impossible.

In order to maximise your chances of getting a business car lease, you should be prepared to provide the Finance House with all the information we have already mentioned, but you should also be prepared to go above and beyond. This may include showing them a realistic cash flow forecast. If you provide the Finance House with a forecast that is unrealistic then it won’t be taken seriously, which will impact your chances of getting a business lease.

The more information you are willing to show the Finance House, the more likely you are to be able to convince them that you will be able to make the monthly payments.

Credit requirements: 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.

If the credit for your business is checked and turns out that you have bad credit, then this could make things a little more difficult. A credit check will be carried out on the director or directors. If they have a strong credit score, then it’s likely that the Finance House will ask for a Director’s Personal Guarantee, or a DPG. Essentially, the director(s) promise that they will cover the monthly payments should the business be unable to meet them.

The DPG is a further reassurance for the Finance House and it also shows that the director(s) has confidence in the business’s success.

If it’s possible for you to provide a Director’s Personal Guarantee this will greatly increase your chances of getting a business car lease.

Business car leasing credit requirements - man in executive car

It’s also worth being aware that if your business is new, or it has a poor credit score then you may be required to put down a higher initial payment. This will alleviate the risk for the Finance House.

It may also turn out that you are unable to get the lowest price because you are a higher risk to the Finance House.

If your business is new, a start-up or has bad credit then we recommend you call us, we are an experienced broker that helps businesses that have many different financial situations every single day. We can talk you through all the information you will need to provide when applying for vehicle finance and help you to get the best deal available given your individual circumstances.

Want to speak to someone about your business finance needs? Contact us now to speak with one of our specialists.

What does a business credit report show?

So what does the Finance House look for when it checks your credit score? What does a credit report show for your business?

A business credit report tells the Finance House a considerable amount about your company, including:

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

As you can see, a company credit report provides quite a bit of information 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? Luckily, there are quite a few ways that you can do this, though they can take time, they include ensuring you:

  • Pay all invoices on time
  • Avoid court judgments, though if one does occur ensure that it is settled within one 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 to ensure that you won’t be left in a difficult situation should one go into administration
  • Keep an eye on the company credit score, so that when the time comes and a credit check is carried out on the business there won’t be any surprises.

When you apply for a business car lease, a credit check will be conducted on your business. This is to reassure the Finance House that you can make the monthly payments. If your company has a strong credit score, then there will be no problem when it comes to qualifying for car finance. However, if the credit score is poor, or your company is new, then it’s likely you’ll be asked to provide the Finance House with more information that shows you can meet the monthly payments. It’s possible that you will also be asked to get a Director’s Guarantee

If you have any questions about business finance, we can help. At OSV we work with businesses every day, helping them to qualify for finance.

WANT TO KNOW MORE ABOUT BUSINESS FINANCE?

Request a callback by filling in the form below, or call us now on 01903 538835.

Rachel Richardson
Latest posts by Rachel Richardson (see all)

1 Comment

  • Tola lyiola| 22nd January 2020 at 6:09 am Reply

    Thanks this was fuĺ details of what l wanted.

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