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Having a business fleet certainly doesn’t come cheap. So, when determining how to purchase one, there’ll be a number of factors to take into account. One such consideration to make is whether leasing vans or buying them used would be the better option for your business.
To help you make your decision, we’ve put together the main benefits and drawbacks of both of these options.
The main advantage of buying a vehicle, even if it’s used, is that it’s yours to do whatever you want with – including branding it. But you’ll also have to take ownership of all aspects of the van, such as the management of it and maintenance payments.
Leasing ensures that this side of van ownership won’t be a bother for you, especially as the vehicles’ perfect condition means upkeep will be minimal. You’ll also get the option to use new vans which are more advanced and fuel-efficient. Buy used, and you’ll be stuck with the same one until it’s sold.
On top of maintenance costs, there’s the upfront payment of the van itself. Even second hand, it can be costlier than leasing. If you’re buying multiple vans, you may get a discount, though this is generally only for at least three vehicles (or, in some cases, more than ten).Leasing has an upfront low deposit fee, and the payment is spread out over the length of a fixed-term contract. With some companies, they’ll provide the option to own the van at the end through a Business Contract Purchase. Opting for this package means you’ll be able to profit from selling the vehicle on in the future.
You can buy a new vehicle using a loan, and the interest on it can be reclaimed entirely against tax. The cost of the van itself can be stated as a capital allowance on your tax return so you could get tax relief on it.
For leasing a van, VAT registered businesses can claim 100% VAT back on the monthly payments, providing it’s solely used for business purposes. If it’s operated for both this and personal use (within a private mileage limit), then 50% can be claimed. These payments can also be stated as an expense on your tax return.
The tax benefits could prove significant in the long term, though you may worry about affording your van in the first place. There’s the option of pursuing a loan for purchasing a vehicle, or going through specialised lenders for leasing finance.
The latter may seem unobtainable if your business struggles to meet the requirements for funding. But Your Car Choice can work with you to understand your specific circumstances and acquire the finance you need to lease your business’ vans. To find a solution, get in contact today.View All
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