If your company van is looking tired and old, it could be time to organise a new one but you’re not sure which is the best way of financing it and whether van leasing would be a better option to buying a vehicle outright.
Can You Afford the Initial Outlay to Buy a New Van?
The first and most important question is whether your business finances would allow for the purchase of a new van. You might well have to borrow all or some of the money from the bank or other lender which means you still have to meet a repayment every month. On top of this, the interest might be prohibitive so in the long run the cost of the new van is more than you had originally hoped to pay.
If you can afford to buy a new van with company money, you need to ask yourself just how tax efficient it would prove to be. On top of this, you would own another asset which if your business fails would be taken to pay off any people you owe money to. Lastly, every year your asset, the van will depreciate in value which you would just have to swallow as part of the deal of owning a new van outright.
The advantage is of course, that you do own the van outright from the moment you take possession of it. You would be responsible for paying for all the van’s monthly running costs, the road tax, insurance, maintaining the vehicle and all the servicing it needs. But the van would be in your name and as such you would be able to sell it whenever you want to and to whoever you want to.
Finding the right van for the job can be the hardest part of the process
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Is Van Leasing a Better Option?
Should you decide to go down the route of van leasing, then you would only need to find a small deposit to secure a new van for your business. There are some very flexible deals out there which could prove to be just what you are looking for and which would suit your company’s cash-flow and meet the business’s requirements to a tee.
The van would not be considered as an asset either because you would not be the owner. The vehicle remains the property of the leasing company so if things don’t pan out business wise you don’t have the worry of debtors taking the van in payment of any outstanding money owed to them.
There’s a lot that comes in a van leasing package which includes road tax as well as vehicle maintenance and servicing. You could also opt for other things to be included in the deal which includes roadside recovery should the van ever break down. If there’s a big mechanical problem, and as long as it is not something the driver has done to cause it, the leasing company would be responsible for getting it back on the road without you having to dig in your pocket to pay for the repairs.
However, the downside is you would never actually own the van and there would be a limit on the amount of miles you would be allowed to do in any one year. If you go over the agreed mileage, you could end up paying a lot in penalties at the end of your lease. However, on the upside it is up to you whether you take out a van lease for a few months or longer and you would need to make sure the mileage agreed in the lease fits what your business would do in a typical month.
When it comes to financing a new van, leasing one does offer many advantages with the main one being you don’t have a massive initial outlay. You can secure a new van on a lease with just a small deposit and as long as you use a well-established and reputable leasing company who listens to your business’s needs, it could be the right route to take. You get a new company van, you maintain your company image and you can arrange affordable an affordable monthly rental to suit your cash-flow.