Fresh for 2016
A van is an important investment, so here we look at which option might best suit you.
Searching for your first van can feel like an assault on the senses. With so many sellers fighting for attention it can be tricky to cut through the upsell, with all the offers and payment plans proving a lot to get to grips with. Broadly speaking you’ve got two options: buying or leasing. So how do they differ, and which will best fit your business?
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First, let’s define the differences.
Buying a van
Buying a van makes it yours. This brings an array of benefits as we’ll soon explain, but you’ll either need to buy it outright or fund its purchase through a loan.
Leasing a van
Leasing is different to buying, as you won’t technically own the van. You’ll just be renting its services - typically for a monthly fee.
Now, as mentioned both buying and leasing bring their own benefits and drawbacks. So, what are they exactly and which of the two offers the best value?
Buying a van tends to bring a bit more freedom as it’s your own property. You’ll be free of strict lease contract limits and you can do what you like aesthetically, so if you fancy scrawling your business name and number on the side, go ahead – nobody can stop you!
You can claim capital allowances against the purchase of van too, lowering your income tax bill. A helpful home to all this sort of info, Gov.uk provide a guide to capital allowances here. There’s also always the option to sell your van on should you need a cash injection.
Leasing doesn’t require a big chunk of cash – either from your own coffers or a loan – as the cost is spread out over the fixed term of a contract. You’ll just need to put up a deposit, which usually isn’t too big.
Maintenance costs tend to be covered by the leasing company so you won’t have that worry either, and should you grow attached to the van there might be an option to buy it. You’ll just need to commit to a ‘lease purchase’ style agreement.
Finding the best option for your business
Now, before committing to buying or leasing it’s important to bear in mind the drawbacks. By buying you’ll be left solely responsible for:
- The van’s upkeep - including breakdowns, repairs and general wear and tear
- The legal logistics - your road tax and insurance responsibilities (although we can help you get a good deal there)
The costs of breakdowns and repairs can be crippling as a hard up start-up, but if you’re a little more established and can cope with these payments then buying could make more sense. Leasing certainly isn’t perfect for all, as you might face things like:
- Mileage restrictions and hefty penalties should they be exceeded
- Long-term contracts that may not fit with your changing circumstances
- An overall payment that ultimately outweighs the cost of buying outright
So, buying tends to bring a bit more freedom whilst leasing, a little more security. Neither option is necessarily better than the other – what fits best will depend upon your business. Take a long look at your balance sheet, weigh up the pros and cons, and pick your option carefully.
Did you buy or lease your business van? Tell us which worked best for you in the comments!
Looking for self-employed insurance?
With Simply Business you can build a single self employed insurance policy combining the covers that are relevant to you. Whether it’s public liability insurance, professional indemnity or whatever else you need, we’ll run you a quick quote online, and let you decide if we’re a good fit.