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November 20, 2020 at 9:05 AM

 

If you are running a business that calls for the use of vans, finding a resolution about where to acquire them can be a challenging task. Whether you need a single van, or a fleet, you have a number of options to consider and purchasing, hiring or leasing is usually the first question business owners need to ask themselves.

In this article, we focus on the growing option of leasing. To help, we’ve collated for you options to consider and their respective advantages and potential risks.

Before you begin though, you should be clear on what your needs are, the frequency of use, the likely mileage during the next 12-24 months and most importantly, the overall safety of your employees.

Second Hand Van Leasing

Van lease or contract hire is an arrangement that is set within a specified time in which you make monthly instalments of an agreed amount. Some dealers may require you to pay a deposit, but the size of the deposit and the length of the term is often negotiable.

Having monthly contracts might not be practical if you do not have regular daily deployment - so it would be counter-productive to enter into a leasing agreement - a daily hire arrangement might be a better option.

If the need is to deploy people and products regularly, then leasing or outright purchasing are good options - the decision often comes down to the funds you have available for a purchase v’s the deposit for a lease agreement.

Before making a final decision, take into consideration the financial status of your business.  It is also worth looking at the total cost of ownership, potential benefits and any return on investment you might get.

Used Van Leasing: Deposits & VAT 

There are several considerations for used van leasing. Primarily, leasing offers a considerable amount of cash flow release compared to buying outright - minimising the cash strain on your company early on. Another benefit of leasing used vans is the accumulation of tax-deductible lease payments. That is another reason that leasing is growing in popularity.

If you prefer to pay in cash, you are obliged to pay for the VAT of the leased vehicle upon usage. Obviously, the more expensive the van, the bigger the VAT payment. In most cases, the deposit value is usually 10% of the vehicle’s leasing value. To lighten your burden, you can negotiate to spread the deposit and/or VAT payments across your monthly instalments.

Either way, dealers and lease providers are often open to discussing deals that work for both you & them.


Van Leasing

Just like everything else, van leasing comes with its own set of advantages. Here’s a closer look at some of them.

  • Monthly rates with little or no deposit. When a leasing agreement is closed, a pre-agreed monthly cost and deposit is paid. Depending on the deal you’ve negotiated, the deposit may well be waived altogether. Typically payments are on a Direct Debit base on a set date each month. Make sure to understand what penalties apply for what reason - late payment & excess mileage are the more common traps to be aware of
  • Flexible terms. If, within the agreed lease agreement, you need to upgrade your fleet or make changes to the lease agreement, talk to the original service provider - there is often a clause which discusses what flexibility you have, so make sure you are clear in advance and  based on your expected requirements during the lease term, of what flexibility you have.
  • Fewer worries. With van leasing, as the vehicle is new, you do not need generally don’t need to worry about repairs as everything is covered under the warranty.  You also have the option to include service, maintenance & tyre costs.  At the end of the term, the vehicle is returned, so you don’t have to worry about the eventual depreciation of the vehicle’s value nor have to go through the hassle of selling or trade-in negotiations. And, assuming there is only normal wear and tear to the vehicle, no costs are incurred. If you do have damage, defects or malfunctions it is best to report this to the service provider as they occur.
  • Range of van choice. The great thing about van leasing is that the latest and most popular van makes or models are generally available for lease. Of course, the more spec’d the vehicle, the greater the cost, so it’s best to be realistic about your needs and finances.
  • Business benefit. Your investment in van leasing is tax-deductible. This can help you gain a significant amount of savings in the long run - maybe leading to purchase in the future if this would be your preferred long term option

While van leasing does offer a lot of benefits, there are also notable disadvantages to consider:

  • Ownership. Any vehicle you lease is owned by the lease company and there is not usually an option to purchase the van at the end of the term, but it does mean you can enter a new lease every 2-3 years!
  • Mileage. One of the big considerations for leasing is the mileage allowance.  You need to be clear on how many miles you expect to do during the term of the lease.  Agreeing too little mileage may result in lower monthly costs, but if you exceed the amount you anticipate, you will be subject to additional mileage fees.
  • Early termination. If you need to terminate your leasing contract early, there will be a redemption fee. The exact price is pre-determined in the agreement.

New Van Leasing

Aside from second-hand vehicles, new vans are also available for leasing. The process of van leasing is rather simple. You just need to find a reliable and trusted vehicle dealer, choose a vehicle or fleet of vehicles, solidify the leasing terms, pay the agreed monthly instalments and return the vehicle at the end of the agreement.

With that in mind, it only takes five steps to start this venture. When it comes to choosing the make and model of the vans, make sure they will fit the purpose it is intended to do. After that, negotiate a deal that will prove beneficial for you and the vehicle dealer. After closing the agreement, the new van will be delivered to you. You get to drive and enjoy it in any way you can. When the lease agreement comes to a close, all you need to do is return the vehicle in good working condition. The process does sound simple because it is!

The only disadvantage of this, you shoulder all the repairs if you are in an accident or any malfunctions. New vehicles are modestly used by the service providers. You have to be careful in handling them or you would have to pay more than what you have entered into.

In the end, whichever option you choose you to need to consider the finances of the company and the long-term implications that it has on your business and operations. Typically, van leasing agreements last for a year or two, depending on the initial agreement. You might want to consider being modest in the first few months before jumping to take a full-blown contract agreement with them. This way you have a leeway to assess if your current situation requires this and if there are other service contractors available that provide equally dependable service but at a more reasonable price. So choose. Do the research and take your time understanding your needs.

Leasing Vans for Business

Want to get the best price deals for van leasing? Check out Big Van World. They offer a wide collection of used cars and vans of various models, makes and prices that are updated daily. Every day, there is a deal that will be sure to fit your needs. 

If you want to learn more about leasing used vans for business or personal use, why don’t you talk to the experts at Big Van World today? You can make a general enquiry, get a quote on a van of your choice or grab a limited offer as soon as they are out. You can contact them on 01793 751866 or fill out their contact form here.


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