There are benefits to both buying and leasing a new business van. While buying means that you will own the van, at least at some point, this in itself may be one of the problems. Once you own the van, you will have to pay for all repairs and you will also face the cost of depreciation.
When you lease, although you don’t own the van itself at any point, you have the option to hand it back at the end of the agreement and walk away, or hand it back and get a new van. Leasing may not be ideal for everybody, but if you are struggling to find the cash to buy a van outright, or you like the idea of driving brand new van every few years, then it could be the right option for you. What’s more, there’s also a great selection of vans available for lease.
Lease terms can be flexible. Although most agreements have a maximum mileage limit, you should be able to discuss this with the lease company so that you can increase the number of miles you can cover during that period. Van leases tend to have higher mileage limits than leases for a family car, because they tend to be used more often and cover greater distances.
Although the terms of the lease are flexible to begin with, one of the benefits of leasing is the fixed monthly cost. You may have to pay three months’ lease up front, but after that you will pay a fixed monthly cost for the term of the agreement. You may have the option to pay a fixed fee at the end of the term in order to buy the van outright, too, or you will be able to hand the van back and take a new model for similar terms to your current deal.
Depreciation costs are often overlooked, but they represent a significant loss on what could be a large investment. If you’ve ever bought a new car or van and then come to sell it a year or two later, you have no doubt been horrified by the amount of money it has lost over that period. By leasing, you can avoid this loss while paying the predictable and fixed monthly fee.
Potentially the biggest benefit of leasing is that you do not have to find the capital to buy the van before you can drive it. The deposit you usually have to pay is typically around 3 months’ rental payment. Compare this to the cost of buying a new van and the financial benefit should be obvious.