Thinking about buying or leasing a van? Let’s weigh up the pros and cons
When you need a new van you’re faced with a bewildering series of decisions; size, payload, fuel efficiency, insurance costs and on and on. One major decision is whether to buy or lease a van.
Which way you go will depend on several factors. Let’s look at those pros and cons.
Benefits of buying a van for your business
For many businesses buying a van outright is the usual route to go down, though this can be expensive and will usually involve a long time dedicated to finding the right second hand vehicle.
Some of the points in favour of buying a van outright are:
• It’s your asset. Although the van’s value will depreciate over time it’s still a business asset that you have total control over. Once you’ve handed over the money the van becomes a business asset. Plus, you can offset a lot of the running costs against tax too.
• No Leasing Restrictions. Lease agreements have restrictions on things like mileage per year. For some businesses these restrictions won’t be workable.
• No Monthly Lease Payment. Of course you will face the normal monthly costs associated with a vehicle; the running costs of fuel, maintenance, van insurance etc, but you won’t have the lease payment to worry about. Once you’ve budgeted for the purchase, it’s one less financial outgoing to worry about.
Of course, on the other side of the coin you need to remember that the van will depreciate in value over time and you’re responsible for all the upkeep. These factors often lead businesses the other way when it comes to deciding to buy or lease a van.
Leasing A Van: The Pros
Leasing a van has become gained in popularity in recent years. When leasing sometimes there is an option to buy the van at the end of the lease period, which can work well for smaller businesses that have been able to build up their finances during the lease.
The pros of leasing include:
• You can spread the cost. The initial outlay when leasing a van is much smaller than when buying a van. Then you have a fixed monthly payment. You can plan your financial commitments around this steady outlay.
• Fewer Maintenance Worries. Van lease agreements usually include a servicing and maintenance package. This puts all the routine costs of running a vehicle under your monthly payment so you don’t have to dread a surprising and costly repair.
• At the end of the lease you give the van back. When your term is up it’s easy just to return the old van and lease a new one. No time consuming and stressful process of selling the old van, just swap the old van for a new model.
The cons of leasing a van instead of buying can be that if you break the restrictions of the agreement, like going over the mileage limit or returning the vehicle with any damage, you can be hit with penalties. You’re also stuck in a contract that may be too inflexible for your business plan.
So, when the time comes should you buy or lease a van? In the end it’s a decision that comes down to what makes financial sense for your business.
Buying a van and need to arrange cover? Direct Line can help you arrange your van insurance.