For people who need a van to run their business, the decision to buy or lease is an important one. Neither choice will be right for every business owner and each option should be weighed up based on business needs.
Buying a van
When you buy a van, you own it outright and can do what you want with it, including adding branding for your business. You also have responsibility for its upkeep, road tax and insurance.
If you have sufficient capital, you can purchase a van outright. If you don’t, you might need to take out a loan, which accumulates interest. How much money you have will impact whether you buy a new or used van.
A new van might be more reliable and be covered by warranty, whilst a used van will be cheaper and perhaps a better option if you are just starting out. If you are looking for a used van, check reputable companies, such as https://www.fleetwayrentals.co.uk/, who sell on vehicles previously used for van hire in Gloucester.
Depending on whether you use traditional accounting, cash basis accounting or simplified expenses, there are tax advantages to buying a van. With traditional accounting, for example, vans can be claimed as a capital allowance or, if you have a bank loan, you can reclaim interest paid.
Leasing a van
When you lease a van, you don’t own it and you’re tied into a fixed term contract with certain restrictions, such as mileage limits. This contract normally covers maintenance costs and might include insurance.
When you lease a van, you don’t need to make a large capital outlay or take out a loan and you can spread the cost over a fixed period. You will need to make an initial deposit. Leasing generally includes an upfront fee, monthly payments and, if you want to keep the van at the end of your contract, a final payment. Some leases don’t require a final payment, but this might mean larger monthly fees, and not all leases allow you to buy the van at the end of the contract.
If you are only using the van for business purposes and you’re VAT registered, you could potentially claim back 100% VAT on your payments. Your rental payments might also be tax-deductible.