Buying or Leasing a Van?
Buying vs Leasing a Van or Commercial Vehicle
Often, picking out the van you want is the easy part. Things can get a bit tricky, though, once you start thinking about how to pay for it. But, you’ll end up more pouring more money down the drain if you’re going to try and keep your clapped out old van on the road.
So, when it comes to replacing your van, what options are open to you? The first thing you need to decide is whether you’re going to buy or lease. If you’re not sure what the pros and cons of either are, we’ve put together a simple guide to help you make the best decision.
The difference between buying and leasing
Buying is the easier to understand of the two – you get the money together (either through a loan or from savings), use it to buy the van and you are the owner.
Leasing is a bit less straightforward, but it does have its advantages. The first thing you must realise is that by leasing a van, you’ll never truly own it.
Instead, you pay the leasing company a monthly fee and you can use the van for the length of your leasing agreement. After that you hand it back and get a new one. You also have the option of purchasing the van at the end of the leasing term by paying the company a one-off lump sum.
The pros of buying a van
There are a number advantages associated with buying a van. Firstly, when making the initial purchase, you can get the most for your money by bargaining with the dealer or private seller to get the best price.
You can also take a big slice off the purchase price by trading in your old van.
Leasing a van can come with a limit on your annual mileage, therefore buying a van will leave you free to cover as many miles as you like.
Of course, when you buy the van you are the owner and if you have your own business, the van becomes one of your company’s assets. This means you can sell or trade it at any time when you need to.
The pros of leasing a van
There are a number of reasons why leasing a van can be a good idea. One thing you’ll certainly notice is that the monthly payments are a lot lower than what you would pay on a loan or finance agreement used to buy a new van.
Leasing also means you can get a new van every few years. Once your leasing term expires, you just hand the van back. You then have the option of leasing out a new van under a new agreement.
For a business that wants to keep its costs down, this is a good choice. You won’t have to pay to maintain the van and you won’t have to worry about the vehicle losing its value.
The breakdown and maintenance cover is usually including in the lease agreement, which means if the van breaks down or needs repaired, the lease company will meet the cost of getting it back on the road.
Leasing a van also comes with the option of buying the vehicle outright when the initial lease period is over.
Making your mind up
Now you know the options available to you, you must decide which best suits your requirements. The main driving force behind your decision will be the cost.
Buying a van is a big financial commitment as you’re not only forking out for the initial purchase, you’ll also have to factor in servicing and maintenance cost. The value of the vehicle will also fall considerably over the years.
However, if you are confident you can afford it, buying a new a van could prove to be a worthwhile investment.
The costs are easier to manage with leasing as all you have to worry about is paying a monthly fee and you won’t get stung with any extra servicing or repair expenses.
There is also less risk involved in leasing a van as they are not classed as assets of your business. That means they can’t be seized or used to pay off any outstanding debts if the company goes bust.
The downside of leasing can be that leasing companies have mileage restrictions. You could face additional charges if you go over the agreed mileage limit by the end of the lease agreement term.
Sale or return – what will you go for?
It’s time to take a long, hard look at your finances and decide which option is best for you.
You should also take the time to see what offers you can find on van insurance. Leasing companies can sometime include insurance in their monthly payments for the chosen driver of the van.
If things are going well with your business and you can afford it, then buying may be the best road to go down.
If you are a bit uncertain, then you should probably consider leasing.
Remember, whether you’re buying or leasing, you can still great a deal on van insurance at VanInsured.co.uk – We’re always the best option.