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A Business Van Finance Lease is an excellent way to finance your next van. It offers low monthly rental payments and allows you to benefit from its sale at the end of the lease.
A Business Van Finance Lease is a popular option for customers seeking a fixed monthly rental over an agreed term. At the end of the contract, you will have a final payment known as a balloon payment to pay. When you sell the van at the end of the term, it could be worth more than the final payment which will give you a profit or it could be worth less. You do have the option to reduce the balloon payment when requesting a quote.
Unlike a contract purchase agreement, VAT is charged on the rentals rather than the initial cost of the vehicle, while the final rental – known as the balloon cost - covers the estimated residual value of the vehicle at the end of the contract.
A Van Finance Lease is where you pay to use the vehicle over a fixed term, with the rental cost based on the van’s value and the lease length.
At the end of the lease term, you will pay a final rental – the balloon payment – that will cover the estimated residual value of the vehicle. The final rental will have been calculated based on the expected mileage you agree at the start of your leasing term.
At the end of the agreement, you have the are required to sell the vehicle to a third party to pay the final payment. Alternatively, you can pay the final payment and extend the term of the lease to continue using the vehicle.
If the final sale price is above what the predetermined balloon payment is then you will retain the equity generated from the sale, less a small charge from the leasing company.
If the sale price is lower than the balloon payment, then you will be liable to cover the shortfall.
A Business Van Lease would suit customers who:
Who Owns the Van During a Business Van Finance Lease?
The leasing company has ownership of the van throughout the lease, you will not own the van outright.
Can I Own the Van at the End of a Finance Lease?
No, it is your responsibility to sell of the van at the end of the lease to a third-party. However, you have the option to extend the term of the lease agreement.
How is Finance Lease Different from Contract Hire?
While you are responsible for selling the van at the end of a lease, you can benefit from the sale if the amount is more than the final balloon payment that covers the last rental agreement. With contract hire, you simply return the van at the end of the lease with no resale responsibilities.
Are there tax benefits to van finance leasing?
Yes, VAT-registered businesses can usually reclaim up to 100% of the VAT on monthly payments if the van is used exclusively for business. Monthly payments can also be offset against taxable profits.
Is maintenance included in a finance lease?
Vansdirect offers a maintenance package that is built into your monthly payments during the term of your lease.
Do I need to insure the van during the lease?
Yes, you are responsible for ensuring you have comprehensive van insurance throughout the duration of the lease.
Is a finance lease suitable for sole traders or limited companies?
Business Van Finance Leasing is a flexible option for sole traders and limited companies who want the use of a van without the commitment of owning it outright. It is also a tax-friendly option.
