Leasing a van is an option that can save you a considerable amount of money when setting up a business. Rather than shelling out to buy, you borrow – and avoid many of the associated costs.
The basic facts of leasing are these: leasing is a way of borrowing and driving a van (or car) for a set period of time from a company. The driver pays a set fee per month to borrow the vehicle, and rather than a sum based on the overall cost of the van, the value actually depends on the vehicle’s depreciation plus the rental fee. That way, the lease company makes money on a vehicle that would be depreciating anyway, since all vehicles fall in value as they age or rack up the miles.
Typical lease agreements for a van such as a Transit or Vauxhall might last for 2-3 years, with a set fee agreed at the onset of the lease term. An initial deposit may be paid on the vehicle (or vehicles, if you are leasing a fleet of vehicles). Typically, lease agreements include free maintenance and breakdown cover of the vehicles, and this could be a real money-saver, especially towards the end of the term. It’s certainly worth considering the option of leasing if you need a fleet of vehicles and are not bothered about ownership, but more on cutting down on costs.
The downside of leasing is that at the end of the term the driver does not own the vehicle, although they might be able to put down a fee to pay for it, or alternatively take up a lease on another, new vehicle.
There may be a few other things to watch out for when leasing a vehicle that make the price appear lower than it actually is. These include agreeing to pay a big deposit to the lease company, and agreeing to a lower cost that includes a low mileage threshold than you’ll use. If, for example, you agree on a 30,000-mile yearly limit and then break this, you could face a financial penalty.
Accountingweb.co.uk describes scenarios where a vehicle is leased out for longer than the term of its warranty; so for example, the lease is 40 months but the vehicle is only covered for three years. That might not matter if the van remains trouble-free, but if it starts to need treatment in those past four months the driver may get angry that they’re paying to fix a vehicle that isn’t even theirs. Another aspect to consider is whether the lease firm is a member of the British Vehicle Rental and Leasing Association; this membership means that the firm has a code of conduct which it must follow when leasing.
The typical advice would be to work out exactly what type of van you require; how many people will use it and how many vehicles you might need, and then shop around for a quote. If your needs are very precise and prescriptive, then phone the company and explain your needs rather than guessing. If you cannot find the lease to suit you, or you have concerns about the lack of ownership at the end, then buying might be the better option. However, leasing is a good option for many people.