Easily apply digitally
You can easily apply for your investment credit in KBC Touch, KBC Mobile or KBC Business Dashboard.
You can enter the rental invoices as business expenses in the income statement.
No down payment required
You spread your VAT payments.
A company car is often vital to a new or existing business’s operations.
But what if you don’t have the necessary funds to get one straight away? Or perhaps you do have the money, but you’d rather use it for other investments?
KBC can still help you finance the car. We offer three options.
You can finance the vehicle using a traditional investment credit. In this case, you become the owner of the car you buy: KBC simply helps you finance the purchase.
Another option is leasing. If you choose this method, you are the lessee and you place the car on your balance sheet and depreciate it. In this case, you have the right to use the vehicle, while KBC remains its owner.
A third option is renting. This is an off-balance-sheet leasing method, in which your business pays a regular fee to KBC (similar to hiring) for use of the car. We’d like to look at the renting option in a bit more detail.
What is renting?
If you opt to rent your car, you choose the vehicle yourself from whichever dealer you like. You also decide which insurance company to use.
KBC then buys the car on your behalf and so remains its full owner. You pay a regular fee to use it.
It’s worth knowing that you don’t have to make a down payment: we pay the full amount of the investment to the supplier (the car dealer) including the VAT payable on the car. You spread your VAT payments via the monthly rental invoices.
You’re responsible, meanwhile, for maintenance, repair, tyres, breakdown assistance, fuel, insurance and similar costs.
How does renting work from the accounting point of view?
If you opt to rent, you have to process your rental invoices in your monthly accounts. They are entered as an operating expense in your income statement. In other words, your car is not included in the balance sheet.
You also increase your lending capacity.
You don’t have to worry about additional collateral either, which is not generally requested. This means you retain your collateral capacity for other commercial loans.
So greater scope remains for you to fund your operating capital and other possible investments.
How is the price of renting calculated?
You pay a monthly rental fee to KBC for up to five years.
It’s useful to know that you can take advantage of a higher first invoice of up to 30%. This can be more tax-efficient if you are a liberal professional or self-employed and want to maximise your expenses, but it is certainly not compulsory. The higher initial invoice at the beginning of your contract – and the high residual value at the end – mean you can sharply reduce your regular repayments.
You buy a car costing 20,000 euros and opt for a higher first invoice of 30% and a residual value of 16%. In this case, you are spreading just 10,800 euros, not including interest, over the selected term.
What is the residual value at the end of your contract?
You have the option at the end of your contract of buying the car, the cost of which depends on the residual value agreed at the beginning. The standard figure at KBC is 16%.
What’s the difference between leasing and renting?
Renting and leasing are similar in many respects, but there are several noteworthy differences too.
In the case of leasing, for instance, accounting occurs via your balance sheet: capitalisation and depreciation.
With renting, by contrast, the invoice is entered directly as an operating expense in your income statement.
You can also opt for a higher first invoice of up to 30%.
Whichever method you choose, you always have a purchase option at the end of your contract. There is a difference, however, in the residual value specified there.
The standard figures at KBC are 16% for renting and 4% for leasing.
What happens at the end of your contract if you don’t want to assume full ownership of the business equipment and KBC is unable to sell it on at the agreed residual value? In that case, you pay the agreed residual value guarantee. Unless, that is, you agree a repurchase commitment in your contract. In that case, a third party undertakes to purchase the goods at an agreed price.
What’s the difference between an investment credit and renting?
If you opt for an investment credit, you become the owner of your car. That’s fairly obvious, as you are buying the vehicle yourself, with KBC simply helping with the finance.
In the case of renting, you pay a regular fee to use the car.
Investment credit, leasing or renting: which is best for you?
Your personal preferences and financial situation are important factors when making the right choice between an investment credit, leasing and renting.
The relevant pages here tell you about the accounting treatment of each approach, the terms and conditions of the purchase option and who actually owns the vehicle. This will make it a lot easier to decide which formula suits you best.
How do I apply for financial renting?
- Choose a car and ask for a quotation from an official car dealer.
- Get your credit yourself online.
- Application approved and contacts signed online? We will confirm the order with the dealer.
- You can pick your car up as soon as the dealer tells you it’s ready. We do the rest.
- Pay the regular invoices to KBC.
A quick summary of the benefits of renting
- Which dealer, car and insurance company you choose is entirely up to you.
- You submit your application to KBC and can receive approval within 24 hours.
- There’s no down payment. KBC pays the full amount of the investment to the supplier (the car dealer) including the VAT payable on the car.
- You increase your lending capacity. No additional collateral is generally required. This means you retain your collateral capacity for other commercial loans and increase the scope for financing your operating capital and other possible investments.
- You repay the VAT over a longer period and KBC takes care of the prefinancing.
- You report the car as an expense and it appears in your income statement.
- You can take advantage of a higher first invoice of up to 30%.
- If you want, you can buy the car at the end of the contract for the residual value specified there (16% standard).
- A tax-efficient option for liberal professionals and the self-employed, whereby the higher first invoice can be entered as a business expense when payment is made.