To buy or not to buy – that is the question

Buying or leasing a van

It’s no secret that investing in a new van for your business requires thought. So what's the best way to finance it? Let's take a look at some of the advantages and disadvantages of buying and leasing.

Upfront cost

When you lease a van, instead of paying the full price, you pay a deposit followed by monthly payments over a fixed period – usually between two and five years.

One of the big advantages of this is that you need less money upfront. So if you're a new business, or on a limited budget, the amount of money you would need for a leasing deposit is smaller than if you were to buy. You can also choose to return the van after the agreement, which means there’s no balloon payment required to keep hold of it.

Ownership

The biggest advantages of buying a van is that you own it, and have complete freedom and flexibility regarding its use. It's a valuable business asset which is yours to keep for as long as you wish to. This is especially useful if you regularly tackle challenging terrain and are likely to accumulate scuffs and wear and tear over the years.

With a lease, you never own the van; when your lease runs out, you return the van – and lease a new oneif you want to. It may well involve restrictions on things like mileage, which may be a problem for you as a business. And if you want to get out of the lease early you will probably have to pay to do so. On the other hand, vans depreciate, so if you buy a van, the value when you come to resell it will be less than what you bought it for.

Business contract purchase is a kind of halfway house - at the end of the lease you have the option of buying the van, for a price agreed at the start of the lease, or returning it and, if you wish, starting a new lease.

Tax

In both instances, the taxman will lend a hand. You can claim the cost of buying the van as an expense on your income tax bill, usually as a capital allowance; likewise you can claim the monthly payments if you lease it. You can also claim the running costs: servicing, maintenance, insurance and fuel. If your van is only for business use, and your business is VAT-registered. you can claim VAT back on the monthly lease payments.

Servicing and maintenance

If you lease your van, you'll probably find that servicing and maintenance are included in your lease agreement, so you don't have to worry about them. You can also add aftersales care to monthly payments for a purchased van by bolting on a service plan.

At Vanwise Group in Maidstone andHarlow, our van finance options cover a range of needs. If you'd like to test drive one of our used commercial vehicles, give your nearest dealership a call - you'll find us in Maidstone, Dunstable and Harlow