A Brief Guide to Van Leasing: What You Should Know

October 6th, 2023

When it comes to running a business, you want a fleet of vehicles that are efficient and reliable, without costing you an arm and a leg in investments. For many small business owners, that can rule out purchasing a brand new van outright. However, the inflated price of second-hand vehicles in recent years also makes this an unfavourable option.

Thankfully, leasing provides the best of both worlds – you get to use a brand new, reliable van at a manageable cost. Read on below as we delve into the world of van leasing in this brief guide, discussing the essential information you need to know.

Choosing the Right Type of Business Vehicle Leasing

There are three main types of leasing contracts available for businesses. These are hire purchase, contract hire and finance lease. Each of these have their own pros and cons, so it is important to compare them all in order to decide which will work best for your business.

Hire Purchase

If you want to own the vehicle at the end of your contract then choose a Hire Purchase funding deal.

You will pay a deposit followed by a fixed monthly fee over a specified period of 2-5 years. At the end of this period you will own the vehicle so no mileage or damage charges can be applied.

VAT is treated differently on hire purchase agreements, with the full VAT amount due alongside the deposit. This means that monthly costs are lower than Finance Lease and Contract Hire where VAT is spread across the van lease term.

Contract Hire

Contract hire involves the rental of a vehicle over an agreed upon period (usually between 12 to 60 months) whereby you pay an initial deposit, followed by monthly payments. Then simply return the vehicle to the leasing company at the end of the contract by arranging collection on an agreed date.

The leasing company has full ownership of the vehicle, meaning the vehicle’s depreciation in value will solely affect them, not you.

Contract hire also involves mileage limitations, so charges may occur at the end of the contract if these are exceeded, along with any charges for damage.

Finance Lease

A finance lease is very similar in that you pay an initial deposit and monthly payments over an agreed term, however there will then be an optional balloon payment.

This is an agreed upon payment that you will pay at the end of the agreement in order to reduce the costs of your monthly payments; it’s calculated by the predicted value of your vehicle when the agreement ends.

You also own some equity in the vehicle with finance lease, meaning you have the option to buy the leasing company’s share at the end of your contract and own the vehicle outright, trade in for a new model, or you can sell it.

The Benefits of Leasing Your Van

There are a number of benefits to leasing a van (or vans) for your business. These include:

• You get to drive a brand new, reliable van of your choice.
• You pay low monthly payments at a fixed price.
• The initial deposit tends to be more affordable than a loan deposit.
• Road tax is included in your payments rather than needing to be paid separately.
• You may be able to offset your lease costs against your business’s annual tax bill.
• Some lease plans come with additional benefits (e.g. maintenance plans or roadside assistance included – typically with contract hire only).

Choosing a Van Finance Company for Your Van Lease

When looking for the best van finance deals, you want to choose a company who has both a large range of vans available to suit your needs, as well as the option for different leasing contracts depending on which aligns with your requirements best.

Here at Global Vans, we have a selection of finance options to choose from, offering a simple process and transparency throughout so you can arrange your van lease with no fuss.

Get in touch with us today to discuss your options.