Van leasing is an exceptionally tax-efficient and manageable way to start or expand your fleet of vans. Vans are a vital part of many different businesses, allowing you to provide services and store/use equipment that’s needed to complete work. Van leasing allows you to obtain a new or used van to begin or expand your fleet – with a deposit that you decide on and manageable monthly repayments. With options to finance lease your van or vans to return them when the contract ends or hire purchase where you can purchase the vehicle(s) after the contract period ends – van leasing and financing is the perfect way to expand your operations.
This article provides you with a complete guide for your business’s van leasing. We cover:
- The benefits of leasing a van or multiple vans compared to other methods such as purchasing the vehicle outright.
- How you can use van leasing to manage your cash flow with a variety of different van lease deals to ensure that you are able to expand your fleet and manage this investment. These options are flexible to suit you.
- An explanation of the various contracts and terms that are available as well as suggestions as to which may suit you.
This article was written by Universal Vans, one of the leading independent van leasing providers that helps their clients lease a van.
The benefits of van leasing (contract hire & hire purchase)
There are a number of ways to acquire your new or used van(s) and each of these has different features and benefits. Buying a van outright is a method of obtaining your vehicle however this exposes you to certain risks. You take on responsibility for the asset and are exposed should anything seriously go on with the vehicle. Van leasing with a contract hire or hire purchase agreement offsets this risk and allows you to pay for your van or vans with manageable monthly repayments. Van leasing is also highly tax efficient when leasing against the business – you are able to claim back VAT if you are a VAT-registered business.
Contract hire is one of the most popular options available to lease a vehicle. The main difference compared to personal contract hire is that the agreement applies to your business rather than to yourself as an individual. You will pay the deposit which is usually the equivalent of six to twelve month instalments but the deposit will dictate the cost per month of the agreement. A typical agreement period is from 1, 2, 3 to 4 years but there are other agreements that are available. The van or vans used are usually returned after the agreement period ends and are returned to the finance company – with any costs of repairs falling under you to repair.
Hire purchase provides the option to purchase the van or vans after the fixed period ends. The length of this contract is typically 2 to 4 years but may vary. In some agreements, you may have the option to make a payment to purchase the vehicle(s) outright with a lump sum payment.
Finance leases are typically provided for high-risk vehicles such as for industries where the vehicle is likely to be damaged but also provide you maintenance protection. It’s a common solution for businesses that don’t find contract hire appropriate or don’t want to have to pay for maintenance of their vehicle. You will always return the vehicle after this agreement ends.
Managing your fleet with your chosen lease agreement
Cash flow management is simple when arranging for a van lease deal. You know the price of the deposit that you have to pay as well as your monthly repayments. You will also have an indication of the balloon payment at the end of your agreement if you are looking to keep the vehicle after the contract ends. You are able to offset the requirements to maintain your vehicle with finance leasing but are unable to keep the vehicle. Contract hire tends to be cheaper in terms of monthly repayments compared to hire purchase. There are many options available to suit you and ensure that you are able to equip your business with a new or used van or fleet of vans.
