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Business vs. personal vehicle leasing – what’s the difference?

A quick guide on the differences between business and personal car leasing so you can decide which is suitable for you

Mark Nichol

Words by: Mark Nichol

Published on 31 May 2024 | 0 min read

There are two main types of leasing contract: personal and business. Auto Trader Leasing offers them both. You’ll notice that they’re priced slightly differently, so it’s important to know the difference and make the right choice. We’ll explain all here. It’s pretty simple.

What is leasing?

Leasing, also known as Personal Contract Hire (PCH) or Business Contract Hire (BCH) is a cost-effective way of paying for the use of a brand-new vehicle over a fixed term. In both cases, the fixed monthly cost is determined by the price of the vehicle, the initial payment, the length of the lease, and the annual mileage you agree. You can adjust all those variables to come up with a payment plan that suits you. At the end of your lease contract, you simply hand the car back.
There’s much more on how leasing works in our dedicated article here.

What is a business lease?

A business lease is a contract tailored for business use. Limited companies, sole traders, partnerships and LLPs can take out a business lease. It’s usually cheaper than a personal lease like-for-like, because leasing through a company means that some or all of the VAT can be claimed back; if the vehicle is used solely for business, all of the VAT can be claimed back, or half if it’s used as a personal vehicle too.
Because the annual mileage tends to be higher with company vehicles, business lease contracts tend to offer a higher maximum – usually 40,000 miles per year, as opposed to 30,000 miles for a personal lease. Excess mileage charges will still apply if the maximum is exceeded.

What is a personal lease?

A personal lease is for any individual whose car (or van) is for personal use only. This includes travelling to work and back. It otherwise works in the same way, giving you flexible payment options and an agreed annual mileage. The main difference is that you can’t claim the VAT back on a personal lease. The average annual mileage allowance tends to be around 10,000 miles, although you can decrease this to lower your monthly costs – or increase it if you need to, of course.
Find your perfect car with Auto Trader Leasing here. Find your perfect van or pick-up truck with Auto Trader Leasing here.