WHEN it comes to sizing up the van that’s best for your business, it’s worth remembering that there are various ways that you can pay for it.
Indeed, you might find that instead of buying one, a specially tailored contract van hire agreement or short-term hire will be more appropriate for you.
Whilst some businesses prefer to own their fleet of vans outright, others prefer to leave depreciating assets in the hands of others and rent their vans in a variety of ways.
In this article, we look at what it’s like to buy, hire, and lease a van, identifying their respective strengths and weaknesses. Armed with this knowledge, you’ll be able to work out which is the best option for you and your business fleet.
Buying a van
Often treated as an unavoidable cost, some businesses prefer to buy their vans outright. Allowing businesses to use their vans as they see fit, this approach is not complicated by the mileage limits set by most hire agreements.
However, just like anything else on the road, the value of a van depreciates. Whilst business owners may find that purchasing reduces a tax bill, it’s not going to be an asset that can be used to secure a larger cash injection further down the line.
For this reason, buying a van is no investment and it may be more sensible to look at the option of leasing or hiring one.
So, to review:
Buying a van – The pros:
- You own the van outright and won’t have to make regular payments
- You can use the van as you please and won’t have to abide by mileage limits
- You have the option to fully customise the van and fit it out to your specific requirements
- The ability to add signwriting makes for excellent branding and promotion whilst reflecting a professional image
Buying a van – The cons:
- Initial investment of capital paying for the purchase of the vans
- Paying for regular servicing and tax as well as unexpected repair bills
- High potential of lost earnings whenever the vehicle is off the road
- Inevitable loss from depreciation when selling the van
Leasing a Van
Helping to spread the cost of running a van, leasing is an attractive option for those keen to avoid the costs of depreciation and repairs as well as the large investment of capital necessary for purchasing a vehicle.
Once the agreed upon term is completed, they will have the option to begin leasing a new model or purchase the van they’ve been using.
Varying from provider to provider, some lease agreements will include maintenance whilst other agreements will mean that that the leaser will pick up the bill when it comes to servicing or visiting the MOT centre. On top of these costs, any individual or business leasing a van will typically be responsible for paying insurance.
What might deter some businesses from using this model is that the mileage rates set by the lender can be inflexible and exceeding them can result in some hefty fees.
The rule around signwriting also differs from provider to provider, so it’s important to check if this is allowed before you commit to leasing a van.
Leasing a van- The pros:
- Doesn’t require a large upfront payment
- Monthly payments are generally quite low
- You can upgrade, or switch vans every few years
- Has tax incentives for businesses
- No hassle selling off fleet vehicles at the end of the term- just give them back
- Some providers will still allow signwriting
Leasing a van- The cons:
- The payment model costs more in the long term
- Repairs are not always covered by the van provider
- You don’t own the van at the end of the agreement
- Servicing, repairs, and tax bill are all paid on top of the hire fee
Hiring a Van short term
Most common amongst those moving home, short term van hire is the ideal solution for those needing to complete big one-off jobs.
It’s also an ideal solution for businesses which temporarily need another van in their fleet to provide an optimal service. With rates being negotiable, this can be carried out for a week, month, or indeed any other period of time.
Unlike buying or leasing, this option is obviously more suited to individuals or businesses who would have no long-term use of a van but stand to benefit from using one in the short-term.
Hiring a van – The pros:
- No need to make a lengthy and costly commitment
- Pick up and drop off at your convenience
- Only pay for the time that you need to use the van
- Flexible for businesses needing variable resources
Hiring a van – The cons:
- Often limited to a set mileage
- A small premium to be paid on insurance
- No signwriting option means your company branding will not be present
- Dependent on availability
Van contract hire
Van contract hire – or van leasing – the perfect solution for those who require a van for longer periods of time but do not want to go through the costly experience of buying one, contract hire no doubt offers the greatest convenience.
Indeed, besides having a van to use, those signed up to a contract hire will often have all their maintenance and servicing taken care of by the provider. What’s more, if their vehicle is out of action, a replacement will be provided at no additional cost.
Ultimately, long-term contract hire offers a great deal of flexibility but does not lead to the ownership of the van once the agreement has been completed.
Van contract hire – The pros:
- Hassle-free fleet management
- Create a bespoke agreement that suits your needs best
- Minimal upfront fee
- All maintenance and servicing taken care of
- Trade in or upgrade with ease
- Depending on the provider, professional signwriting can still be added to the van
Van contract hire – The cons:
- You do not own the van at any point
- The deal will depend on the provider
Having examined the various ways that you can pay for a van as both an individual and a business, it’s clear that there are distinct advantages to each approach.
When it comes to deciding which is best for you, it’s important to ask if it’s vital that you have complete control over the vehicle, or if making some small concessions to sign a contract hire is likely to provide a more appropriate solution.