August 09, 2019
Buying a new van can be stressful. If you’re a business owner looking for new vans for sale, there’s a lot to consider. Cash purchases, initial payments, mileage restrictions, usage conditions, dimensions, van leasing – there’s a load of things to take into account when thinking about your next van purchase. The good news is that we’re here to remove the confusion and help you make sense of all of the different types of van finance available.
There are three main options; Hire purchase, Van Leasing or Contract Hire. You can also buy outright. We’ll run through the options to help you understand which is best for you.
The popularity of van leasing has soared in recent times as the ability to obtain a van with a smaller initial outlay and lower monthly payments proves attractive to business owners. The only drawback to a van lease agreement is that you will never own the van you’re leasing.
When your van leasing agreement comes to an end, there is usually a ‘balloon payment’ – the idea is that the van is sold to cover this payment. It’s calculated using the age of the van at the end of your agreement, along with its projected mileage.
Van Leasing is a good option for businesses on a budget as you can easily calculate how much the lease will cost over the agreed term. Our van leasing deals range in length from 2 to 5 years, and come in the form of non-maintained or maintained agreements. A non-maintained package means that the maintenance of the van is your responsibility, whereas a maintained deal covers tyres, brakes, warranty repairs and servicing.
The option for those who like convenience. The main benefit of taking a new van on a contract hire agreement is that you simply hand the van back at the end of your term. Imagine a ‘long-term rental’, if you will. Mileage restrictions will apply to contract hire agreements, and should you exceed them a charge is usually applicable. This charge should be clearly detailed during the process of acquiring a van.
Other usage conditions will include damage and signwriting. Normal damage due to regular ‘wear and tear’ is not usually penalised, but any significant damage will incur a charge. With regard to sign writing, the practice is allowed but should be removed prior to returning the van. Damage charges apply here too, so be sure to use a ‘safe’ substance like removable vinyl to avoid damaging the paintwork.
In the same way as a van leasing package, both non-maintained and maintained deals are available on a van contract hire agreement.
If you want to own a van then this is the option for you. With a van hire purchase agreement, you pay a significantly higher deposit than you would on a van leasing or contract hire deal. This is normally 20% – equal to VAT – which means that your monthly payments are not subject to VAT, as it has already been paid.
Van Hire Purchase deals are the most expensive, but this is to be expected as you are essentially buying the van, albeit over an agreed term. The benefits include no mileage or usage restrictions.
At Vansdirect we supply vans primarily on van finance agreements. However, from time to time we are able to provide outright cash quotes for certain vans. Paying for your van and driving it away with no ties is an attractive option, but it’s not always feasible – especially for smaller businesses.
When you buy a van you will inevitably suffer from depreciation, although you may intend to keep the van for as long as possible to mitigate the effect of depreciation. However, this in turn means extra maintenance costs, so it’s a case of ‘swings and roundabouts’.