Van Leasing vs Van Buying

 

Van Leasing vs Van Buying: What’s More Intelligent?

Choosing a van is the easy part. There are plenty on the market. At the last count there were 61 different ranges available – and that’s before getting into the complexities of weight and power specifications. So there is a good variety to choose from.

But choosing the right van, that’s the intelligent bit. Getting the correct size of van for what your business requires is what you have to consider.

Go too large on your van – and you are paying extra cost for volume that’s not required. Plus the additional running costs that a larger van entails. Alternatively, choose a van that is too small and it may hamper your ability to trade effectively.

So what size van should I choose?

If you are a carpenter, it’s likely that you will need a van that can carry at least a standard 2440mm length of MDF board or a 3m length of wood; if you are a builder, you will need a van that has suitable payload to carry several pallets of bricks or cement; if you want to run a removals business, then volume will be key for you and you’ll be looking at a Box or Luton.

The current trend is towards larger vans. Stats from the Society of Motor Manufacturers and Traders (SMMT) show that vans in the 2.5-3.5t category are taking over 70% of market share in 2018 (up to October).

There’s good reason – for smaller businesses it provides flexibility to cover a variety of jobs as trades diversify the services they offer.

But don’t get hung up about it – if you are going to lease a new van, you’ll pay more for a larger van that you might only use to its full capacity occasionally.

Intelligent tips

Lease a smaller van that suits the work you do every day; and then rent a larger van when you require something larger. The savings could be significant. For example the difference between a VW Caddy lease and a VW Crafter high roof lease from Intelligent Van Leasing is £61 per month. Over a year that’s a saving of £732; over a three year van lease it amounts to more than £2000. Whereas renting a large panel van when you need it costs under £90 a day.

New vans are becoming more flexible. The new Vauxhall Combo, Citroen Berlingo and Peugeot Partner all feature a large aperture into the passenger compartment that allows lengths of up to 3.4m to be carried in long wheelbase versions. That’s impressive carrying ability in a small van.

What type of fuel should I consider?

The majority of vans are diesel. These engines have lots of low down pulling power, which is good for heavy loads; they are fuel efficient, too, so it reduces your operating costs.

However, some manufacturers have started to introduce petrol-engined models while there are a growing number of electric vans available, too.

The reason you need to think about choice of engine is thanks to the growing number of clean air zones around cities. Access will be barred to some types of diesel vans. For example, London’s Ultra Low Emission Zone starts in April 2019 – to enter without paying the £12.50 daily charge vans will need to meet Euro 4 standard (petrol) and Euro 6 standard (diesel).

Similar standards will apply in cities such as Birmingham, Derby, Leeds, Nottingham and Southampton. Cities such as Oxford are planning to introduce a zero emission zone which would exclude access to all traditionally engined vans.

So it’s worth considering what and where your client base will be located before settling on the fuel type that is right for your business.

Intelligent tip

How about considering an electric van? That might not be such a leftfield idea. After all, how far do you actually drive each day? Most trades operate locally and will cover at most 50-60 miles, well within the range of a battery electric van. They can then be recharged at home overnight, or at your lock up. Electric vans also cost pennies to run and are exempt from London’s Congestion Charge. An electric commercial could be a highly intelligent van choice.

Should I buy or should I lease a van?

Once you have narrowed down the choice of vans right for you and your business, there still remains how you will acquire the van.

There are plenty of reasons to own a van, not least being in total control of how long you decide to keep it. Owning a van provides lots of flexibility for you.

However, the downside is the high cost of the initial down payment and then the higher level of the following monthly payments. These are considerably more than leasing and can impact cash flow and ability to expand your business.

With a lease, following an initial rental (usually three months in advance), you then pay just a monthly rental for the period of the lease (anywhere between 24 to 48 months is usual). For a medium sized panel van this is usually from about £220 a month; in fact, larger vans are often a similar rental cost, which again may be a reason more trades are opting for a larger van (see above).

With a business lease, the cost of the monthly rentals can be offset against taxable income in most cases and 100% of the VAT reclaimed, too. If you buy there are yearly writing down allowances that you can claim, but only the monthly interest element on the finance is claimable against tax, not the payments themselves.

Intelligent tip

Deciding on what type of lease is correct for you is important. For ‘clean’ trades business leasing is a good idea. Leasing requires the van to be of a certain condition at the end of the lease (called BVRLA fair wear and tear). For most clean trades this should not be a problem. However ‘dirty’ trades, such as plasterers or builders, might want to consider a finance lease since the condition of the van is not so critical with this form of leasing. Speak to one of our van leasing specialists to help you decide – it may be that full van ply lining and seat covers are all that’s required to ensure the van remains in good enough condition.

If you are still struggling to decide which van is right for you, then talk to the van specialists at Intelligent Van Leasing. They have plenty of experience to assist you – and might possibly have some suggestions that you had not considered before.

Above all, make sure your next choice of van is an intelligent one: your livelihood depends on it.