If you're in the market for a new van for your business, you may be wondering whether it's better to buy or lease. Both options have pros and cons, and the best choice for your business will depend on several factors. In this article, we'll look at the pros and cons of buying and leasing a van, so you can make the best decision for your business.
Here are a few factors to consider:
- How often will you need the van?
- What kind of van do you need?
- How much can you afford to spend?
- Are you looking for flexibility or fixed monthly payments?
If you're unsure which option is best for you, it's always a good idea to speak to a financial advisor. They can help you weigh the pros and cons of each option and find the best van leasing deal for your business.
Read on to find out whether you should buy a lease or van for your business.
Freedom
You can customise your van to better suit your business needs without worrying about breaking any lease agreements. You get full ownership of the new vehicle, meaning you can sell it or trade it in when you no longer need it without giving notice or waiting for the end of the lease. Buying outright has no mileage restrictions, so you can use it as much as you wish without accruing extra charges.
No monthly payments
Owning the van means there are no monthly payments to make – once you've paid off the initial purchase price, that's it!
You don't have to worry about meeting strict service and maintenance requirements like you would with a leased vehicle.
Cost
The initial purchase to buy a van can be expensive, particularly if you're buying a brand new one - you could get a second-hand van to save.
Deposits
You may have to put down a large deposit when buying a van outright, which can tie up much of your business's capital.
Upgrades
If you want to upgrade to a newer model van, you'll have to sell your existing one before you can afford the new one – this can take time and effort.
If you buy, you can't upgrade as easily as if you had leased a van.
Maintenance responsibility
You're responsible for all servicing and additional costs associated with owning a van. These can add up over time, mainly if you don't keep on top of them.
You'll have to pay for the repairs if your van breaks down. This can be expensive, particularly if it's a significant problem.
You may also have to pay for comprehensive insurance cover when owning a van outright, as lenders usually require it, which adds to the overall cost of running your van.
Payment terms
Leasing a van usually involves a lower monthly cost than buying one outright. This can free up some much-needed cash flow for your business. Leasing tends to be more affordable than buying, as you'll only be paying for the use of the van in smaller monthly payments rather than the total purchase price.
Deposits
You may not have to put down a deposit when leasing a van, meaning you can preserve your business's capital.
Flexibility
Leasing is often more flexible than loan terms, so you can choose a new van that better suits your needs. You can upgrade to a newer model van more easily at the end of your lease without having to sell your existing van first. You may also have the option to lease for a shorter term than you would if you were buying.
Leasing a van affords you the flexibility that buying a van doesn't.
Maintenance and servicing
Servicing and maintenance costs are often included in leasing agreements, so you don't have to worry about them. If your van breaks down, the finance providers will cover the repairs. This can save you a lot of money and hassle.
Insurance cover
Comprehensive insurance cover is usually included in leasing agreements, so you don't have to pay for it yourself. This can save you money on your van's running costs.
No depreciating assets
If you owned the van, general wear and tear, along with time, would cause it to depreciate. A depreciating asset leaves you worrying about how much you can sell the van for. In contrast, with a lease, you simply give it back to the company and can trade for an updated model. Depreciation costs result in you losing money.
You're tied in
As you are only borrowing the van from a company and don't own the van, you can sell it on your terms. You may end up with a business van that you don't want for longer, rather than being able to sell it on or trade it in when you're done with it. That said, many leasing companies will let you upgrade to a newer model even before your lease is up.
Less customisable
You can't customise a leased business van to better suit your needs, as you may have to return it to the lender in its original condition. If you wanted to add company branding in the form of stickers, you might be able to do so, providing the vehicle was in the same condition you received it in.
Mileage limits
There's usually a mileage limit with leasing a van, so you could be charged extra if you exceed it.
Monthly payments
You have to pay a monthly fee for the duration of your lease agreement, even if you no longer need the van.
Even if you no longer need the van, you are tied into monthly payments.
The best option for your business will depend on your specific needs and budget. If you need a van for occasional use and are not looking to make a long-term investment, leasing may be the best option. However, if you're looking for a van that you can use for many years, buying may be the better choice. Many businesses find that a leasing agreement is more beneficial to them. Still, it depends on your personal or business circumstances.
An online lender like Love Finance is the best place to lease a van, as we have quicker approval times and rates; and more tailored finance options for small businesses.
If you're looking for quick funding, you could look at a shorter term, such as a 1 year van lease. Short-term funding tends to have faster payouts than longer term.
If you're thinking of leasing a commercial vehicle, it's unlikely you will be able to use it for personal use. Some lenders may be more lenient with the lease terms, so check with the finance provider to see if there are any restrictions on personal use.
One reason a lender may not want to allow you to use the van for personal and business use is the extra wear and tear and how many miles the vehicle will make. When you lease a vehicle, the lender takes on responsibility for maintenance and roadside assistance. So, if you are also using the vehicle for personal use, they may be reluctant to fork out for such costs. Ensure you keep track of your mileage, so you don't exceed any limits set by the lease agreement.
If you lease a commercial van, you can't use it for personal use.
If you're looking to use the leased van for business and personal purposes, it might be worth considering buying one instead of leasing it. This way, you'll have complete control over how and when you use the vehicle.
As Love Finance specialises in business loans, we can only offer van leasing to those intending to only use the van for business purposes.
If you're considering leasing a van for your business, it's essential to check that the insurance cover is included in the agreement. Some lenders may not have this as standard, so be sure to check the terms and conditions before you sign anything.
When insuring a leased vehicle, you will usually only be able to get third-party cover as the van technically belongs to the lender. However, some insurers may offer comprehensive cover for an additional cost.
At the end of a business van lease agreement, you will usually have the option to buy the vehicle outright. If you decide to do this, the price will be based on the van's current market value.
Alternatively, you can return the van to the leasing company and walk away - although you may have to pay an early termination fee if you do so.
If you choose to lease a van, you can own it at the end or return it to the leasing company.
If you're considering leasing a brand new van for your business, it's worth considering the amount of road tax you can claim.
Under the capital allowances scheme, businesses can claim up to 100% first-year tax relief on vans that cost up to £12,000. If you lease a van for £12,000 or less, you could claim back all of the VAT you paid on the vehicle.
If the van costs more than £12,000, you can still claim a proportion of the VAT back - but this will be spread over several years.
To find out how much road tax relief you could claim on a new van, speak to your accountant or get in touch with HMRC.
If you're unsure whether leasing or buying a van is right for your business, there are other options to consider.
One alternative is to rent a van on a short-term basis. This can be a flexible and cost-effective option if you only need a vehicle for a few days or weeks at a time. You can also avoid the long-term commitment of leasing or buying a van outright.
Another option is to use a courier service. This can be particularly useful if you only need to send parcels and packages on an occasional basis. Using a courier service can save you money on fuel and maintenance costs and the hassle of driving yourself.
If you wanted to look into leasing another type of vehicle for your business, read our blog on truck leasing options.
A courier service can be a good option for your business if you don't need the vehicle frequently.
The cost of leasing or buying a van will vary depending on several factors, including:
- The make and model of the vehicle
- The size and type of van you need
- The length of the lease agreement
- The interest rate on your finance deal
- Your personal circumstances
The amount you will pay for the van if you choose to lease it will be the total cost of the van plus the interest accrued and possible deposits.
To get an accurate quote for your van, speak to a Love Finance advisor today. We can tailor a finance package to suit your budget and business needs.
If you're looking into van leasing, there are a few things you'll need to have in order:
- A good credit history - will give you a better chance of being approved for finance
- A valid UK driving licence - you'll need this to test drive the vehicle
- Proof of income - lenders will want to see evidence of your earnings before they approve your application
- Proof of address - you'll need to provide a recent utility bill or bank statement as proof of your current address
- Details of any existing financial commitments - lenders will want to know if you have any other loans or credit cards that you're paying off.
-Must be a VAT-registered business
It may be easier to get the finance if you are a limited company. This is not a dealbreaker, in some circumstances we can still look at sole trader van leasing.
We have a wide range of van lease deals available, so we're sure to find the right solution for you.
There's no right or wrong answer when deciding whether to buy or lease a van for your business. It's important to consider the best van leasing deals for your needs. If you're unsure which option is best for you, speak to a professional for advice.
So, should you buy or lease a van for your business? It all depends on your specific needs and circumstances. Leasing may be the best option if you need a van for a short-term project. But if you need a van for the long haul, buying may be more cost-effective in the long run.
Apply now for van finance through Love Finance to get the best commercial vehicle for your business.