Commercial vans: buy or lease your company van?
If you need a van to run your business, you can either buy your own vehicle, or lease one. If business is good, you may decide to invest in your own van – but if you're just starting out on a new venture, or don't have much spare cash, leasing may be a better option.
Advantages of buying
To buy a van you can either purchase it outright with money you've saved, or take out a loan to pay for it. Buying has a number of advantages, if you can afford it:
- In the long run it tends to offer the best value, especially if you haggle hard to get a good deal.
- For those of you who have an old van to trade in, you can save even more on the purchase.
- There is no annual mileage limit on your use of the vehicle.
- You own the van, and it is a company asset.
Advantages of leasing
Leasing means you will never own the vehicle, which has its own set of advantages. You pay a monthly fee to the leasing company for use of their van. At the end of the lease period (usually two or three years), some companies allow you to pay a lump sum to buy the vehicle outright, if you want to.
- The monthly leasing cost is fixed, so you know exactly how much you will need to pay each month.
- You will never face the maintenance costs associated with running an older van.
- Most leasing schemes include maintenance and breakdown cover in any case, so you don't face unexpected bills along the way.
Which is the best option for you?
Your finances are likely to dictate whether you decide to buy or lease. To buy, you need the finances in place and you then take on the responsibility of full ownership and ongoing maintenance, servicing and depreciation costs. If you can afford it, however, you could save money long term.
If you're unsure about investing in your own van, leasing may be the best option. The beauty of this is that maintenance and servicing costs taken care of, so all you pay is a fixed monthly fee for use of the van. You're tied in for the duration of the contract, but this is generally only for two or three years, after which you can walk away or take out a fresh contract on a new van. Leasing also reduces some of the risk of owning a business, because leased vans aren’t considered “assets”, therefore can’t be used to pay off debts in the event of your business going bust. Just watch out for the leasing company's annual mileage restriction, because if you exceed it you could end up being penalised with a costly bill at the end of the year.
Van insurance cover
Whether you decide to buy or lease your van, you will need good insurance cover, and as with all insurance it's worth shopping around for the best deal. Some leasing companies include insurance as part of the package for the chosen driver, paid in instalments. If you need to find insurance independently, you could try using a price comparison website to collate and compare a range of quotes from a variety of providers - although it sometimes pays to look at alternative providers as well, who aren't listed on the price comparison websites.