When you’re looking to upgrade or expand your fleet of vans, there’s usually one major financial consideration – whether it's more cost-effective to buy the van or lease it.
Both sides have their pros and cons, and to ensure you make the right decision it’s important to consider how the options match up to your finances and your business priorities.
Buying
Finances
- The upfront costs are much higher if you choose to buy rather than lease, and even monthly finance packages are likely to be pricier than lease costs.
- However, your van will become a business asset that you can trade, sell, write off for tax purposes as a capital allowance or even use as capital for a loan.
- It also gives you greater negotiating power, so you’re more likely to be able to haggle on prices.
- If you have an old van, you can often trade it in to save a bit of money.
Business considerations
- You’re responsible for maintenance and repairs.
- You can use at as you want, including painting it for advertising.
- There’s a wide range of insurance options to suit your business.
Extra options
- Second-hand vans can prove excellent value if you complete the proper checks before you buy.
- Alternatively an eco-van could prove a savvy move, with subsidies, cost savings and reputation points potentially available.
Leasing
Finances
- You’ll usually pay monthly, often at lower rates than financing packages for purchase.
- In the long-term, however, you’ll keep paying out cash for no tangible assets.
- Leases frequently include maintenance and breakdown cover options, so you won’t have to factor in unpredictable care costs.
- You won’t own the vehicle, so it counts as a business cost rather than an asset for accounting purposes.
Business considerations
- Van usage can be limited. Some leases have a mileage cap and many don’t allow changes to be made to the vehicle (including branding it).
- Leases often allow you to trade in the van every few years, so you can upgrade your van regularly at no extra cost.
- Any damages to the vehicle must be repaired and paid for by your business.
- You’ll need to inform your insurer that the vehicle is leased, and the leaser will usually expect you to hold comprehensive cover.
Extra options
- Many leases also have the option of a lease purchase, which lets you choose to buy the van after the term is up, giving you added flexibility as your business grows.
Making a decision
It’s wise to draw up all of your financial and business considerations before making a final call. That means working out how much you can afford per month, the average distances you travel, loads you carry and the frequency of breakdowns and accidents.
Once you have a strong inkling for the path that best suits your business, seek out deals, check your eligibility for relevant financing and subsidies and get van insurance quotes to ensure your sums add up.
If you do all this before you sign on the dotted line, you can be confident you’ve made the right choice for your business.
