Buy or lease a van for my business: pros and cons
If you need a new van for your business, you could buy it outright or lease over a few years. Which option is best depends on your personal circumstances. Let us briefly summarise the pros and cons.
Buy or lease a van: lump sum or monthly payment
To buy a van outright you have to spend a big lump sum. This is fine if your business has money readily available. However, if money is tight it could take months to save for the van your business needs. Spending a lump sum could cause cash flow issues, too. In contrast, you can lease a van now via fixed, bite-size, monthly payments and keep the lump sum for other business expenses.
Buy or lease a van: better vehicle
If you lease via fixed monthly payments opposed to needing to spend big with an upfront cost you may be able to lease a better vehicle than you can buy outright.
Buy or lease a van: modifications
If you own a van you can adapt it to suit your business. You can make it into a rolling advert that guarantees you get attention, for example. The potential upgrades include vibrant paintwork, in-your-face transfers, and muscular bull bars. Perhaps, instead, you have to travel over extreme terrain to meet customers. If so, you can lift the suspension and fit off-road tyres. You could also drill holes in the vehicle to fit solar panels, air vents, and extra storage as necessary. If you own the van nobody can stop you.
If you modify a leased vehicle you will need to check with the company you lease it from before making any modifications to avoid facing penalty charges when the van is returned at the end of the contract.
Buy or lease a van: mileage
If you lease a van, you have to estimate your annual mileage at the start of the contract. This, in part, defines the cost of the lease. If you exceed the mileage allowance there is a penality charge when the van is returned. It is typically a few pence per mile. There are no such considerations if you own the van outright.
Buy or lease a van: damage
If you own a van, you can choose whether to fix certain issues. A large dent in the front wing, for instance. In contrast, the supplier expects the van to be in good condition for its age and mileage when it is returned. Whereas ‘fair wear and tear’ is accepted excess damage is not. You may have to pay to fix the wing.
Buy or lease a van: disposal
It can be time consuming to dispose of a van that you own. You might have to sell it privately, for instance. This can involve writing adverts, answering queries, and arranging test drives. It is easier to get rid of a lease van. Just return it to the suppler.