Leasing a van, rather than buying one, can really work for a business, particularly if you are self-employed or running a small business. A van can be the lifeblood to a small organisation, and becomes absolutely critical in it functioning properly. Therefore, you need to be aware of the many benefits to leasing a van and how you should go about the process. Here, we highlight the most important points.
The benefits of leasing a van for a business
- You get a new van at the end of every lease term, the length of which can be dictated by you.
- Maintenance costs can be included in a fixed monthly payment and this should be limited anyway, as a new van should require very little maintenance outside of routine servicing.
- Breakdown cover is critical to the operating of your business and this will also be included in your monthly payments.
- A lease van is classed as an expense, not an asset, so you can use capital funds for other areas of the business.
- A van leasing deal can allow for a high mileage if this is needed for your business.
- You return the van at the end of the lease deal and can pick up a new one.
- You will save money on depreciation over the length of the lease deal, compared to buying a van, so it is cost effective to lease a van as at the end of a three-year lease, for example, you will have paid out less and will end up with a new van, whereas if buying a van you will pay more and end up with an old van.
- You can also claim back 100% VAT on your monthly payments if your business is VAT-registered, provided the van is only used for business use.
- Rental payments can also be classed as a tax-deductible expense.
- The van’s upkeep and general condition. The van must be returned in good condition, subject to acceptable wear and tear.
- You need to comply with road tax and insurance responsibilities, albeit, tax is sometimes included in the fixed monthly payment.
- You must comply with the agreed mileage restrictions, and any other restrictions on use.
- You must keep up with your monthly payments to the van leasing company.
What is the process for leasing a van?
- Firstly you will choose a van, taking into account the amount of space you need for storage or for passengers. You can also look at the cost-effectiveness of mileage and the tax advantages to be derived from low CO2 emissions.
- When you have agreed on a vehicle you will undergo a credit check from the leasing company. This is standard procedure for what is effectively a financial agreement like a bank loan.
- The van will be delivered and you can start using it straight away.
- You will now start paying your monthly cost whilst using the van to build your business. You will also take advantage of the service and maintenance agreement, and can negotiate with the leasing company to change the terms of the lease deal, if required.
- At the end of the lease term you will return the vehicle and can take out a new lease deal on a new van, subject to the generally acceptable condition of the vehicle you have returned.
Your responsibilities when leasing a van
For more information on leasing a van, please contact Pink Car Leasing today.