When it comes to the business world, entrepreneurs are some of the most clever and resourceful individuals out there. With a good portion of the last decade being marred by a weak jobs market, many more young people are choosing the entrepreneurial path than we’ve seen in years. These fast-thinking young people may have the know-how to get their companies off to a successful start, but still face a myriad of different problems out in the world. Leasing a nice car may not only be a want for these young businesspeople, but a necessity if they hope to keep a professional appearance.
Sadly though, many young entrepreneurs face a number of hurdles when it comes to leasing a car. Here are three of the most common problems and how as a young businessperson, you can work around the issues.
Lack of Established Credit
Unless they get started building credit early on, it’s likely that they don’t have a lengthy credit history. Due to no fault of their own, many young entrepreneurs simply have not had enough time to develop a sufficient credit profile. While this may not mean they are irresponsible or unfit to make the required payments, many leasing companies will be hesitant to loan or do business with anyone that does not meet their credit standards – even if they are operating a successful small business. If your company has assets, consider putting the vehicle in the business’ name and offering collateral for your new lease obligations. If this is not possible, a traditional co-signor may be your best bet.
An Already High Debt Ratio
For many young business owners, their credit profile is already full of debt. Because of a weak economy over the past few years and the fact that many young entrepreneurs still have substantial student loans, debt to income ratios for young businesspeople are often higher than they are for those most established in their professional life. Despite the growth and success of your company, a high debt ratio will deter a leasing company from entering into an agreement with you, even if you have the cash flow needed to make your payments. If your company is doing well, focus on either improving your verifiable income or paying down the debts causing your high ratio.
High Additional Mileage Costs
Many young entrepreneurs are attracted to the option of car leasing because this arrangement usually requires a smaller down payment and lower monthly payments than purchasing would. Those lower costs would be great if it was all that you’re required to pay, but many young people considering leasing a car are shocked when they realize just how much the vehicle may end up costing in the long-run.
Most car leasing companies offer you a maximum of a 15,000-mile allowance each year on your leased vehicle. If you top that number, each additional mile can cost you big time. Average rates can run as much as $0.20 per mile you go over, and even small overages each year can cost you hundreds of dollars in added charges. This can be a big concern for young entrepreneurs who tend to drive more and further for both business and personal reasons than many of their older counterparts. If leasing is the best option for you right now, but you know you’ll go over the allotted mileage, consider purchasing your car at the end of the lease term in order to avoid the additional fees.
For young businesspeople, the financial world can be a little extra challenging. While you may have the business acumen of a seasoned veteran, there are still a number of difficulties you’re likely to face because of your age. While most of the common problems are not exclusive to this age group, there are numerous hurdles, and hindrances, which can make it difficult for entrepreneurs just out of school to lease a vehicle. By planning for any troubles ahead of time, the savvy entrepreneur can still find ways to get a good lease on a professional vehicle without causing too much headache.
John Hazlett is an entrepreneur and the owner of frontierleasing.co.uk , a UK leading supplier of car leasing for businesses and individuals . John enjoys driving fast cars as much as planning his next steps as an entrepreneur.