Wednesday, October 1, 2014


When you need a van for your business you have three options open to you, you can purchase a second hand used van, a new van or take out a lease /hire purchase contract. Purchasing a used van doesn't always give off the right impression of your business to your customers, so for most businesses that leaves the option of acquiring a new van. When you purchase a new van you need a large lump sum as a down payment, followed by monthly instalments until the van has been completely paid for. This means that your business will have to fork out a great deal of money up front, especially if you are purchasing a fleet of vans. The solution to getting the new van of your choice for your business, whilst not having to put down a large sum of cash is leasing.

Leasing allows you to have the van of your choice without having to save a large lump sum for an initial down payment. When you lease a van you are only actually paying for the depreciation of the van over the lease term. The leasing cost is worked out by a calculation that takes into consideration the value of the van, the rental term, anticipated mileage and the depreciated value of the van over the lease term. At the end of the lease agreement you just hand the van back over to the lease company, or should you wish to keep the vehicle you can offer to buy the van outright.

When you take out a lease agreement you have a fixed monthly cost for the hire of the van, this agreement can be extended to include any servicing or maintenance costs as well as break down cover. This means the only running costs you have outside of the fixed monthly instalment is the insurance and fuel costs, which means that you are better able to accurately budget your running costs. No large expensive bills also mean that your business can better manage its cash flow.

It's a fact that as soon as a new vehicle leaves the dealers showroom it depreciates in value. This depreciation is passed on when it comes to selling the van, although the rate of depreciation will vary depending on the make and model of the van and the mileage covered. When you lease a van you don't have to worry about falling prices of second hand vehicles as you simply hand the van back over at the end of the lease term.

If the van is leased by a vat registered business, 100% of any vat spent on the lease can be claimed back if the van is used solely for business purposes. If the van is used for both business and personal used, up to 50% of the vat can be claimed back. This doesn't just apply to the lease expense but also allows you to claim back 100% of any vat incurred on any maintenance package you may have with the leased vehicle.

With no large deposit required for leasing and a reduction in your monthly costs it means that your business can often afford to hire a more expensive van than your budget would otherwise allow. Some of the benefits of purchasing a more expensive van include a more fuel efficient engine which ultimately means a savings on your fuel bill over the duration of the lease contract. A more expensive van will often mean better safety features which may have been something outside of your budget if you had to purchase the van.

If you need a van for your business for the next 3-5 years then it's worth considering leasing your next van as an alternative to purchasing.

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