Van leasing? Here’s what you need to know about finance lease.
The world of van hire or van leasing can at times be very confusing.
With hundreds of companies and 1000’s of offers, it’s easy to get lost in all the noise.
Add the options available to hire or purchase a vehicle and at times you may be forgiven for putting the decision aside for another day.
However, if you are at the point you NEED a van, what are your options?
How do you make a decision, one that could affect you for at least 2 years?
Let’s look at one of your options.
For the sake of this post, we will only be looking at finance lease or van leasing,
In it’s simplest form, a finance lease is exactly what it says,
Leasing a van, it is not an ownership scheme!
The lease is spread over 24,36,48 or 60 months, at the end of the term a balloon or final payment is required to complete the finance lease, the vehicle must be sold to a third party, with any profit going back to the person who took out the lease.
So finance lease consists of 3 parts.
- Small Deposit
- Regular monthly payments (min 24 month – max 60 months)
- Balloon / final payment at the end
Am I eligible for finance lease/van leasing?
Finance leasing is available to sole traders, limited companies and individuals alike. and there may be benefits to all.
I’m a sole trader looking to lease a van.
Many sole traders opt for van leasing because it offers them peace of mind when it comes to the monthly expenditure, thanks in part to both the fixed monthly amount and warranty (it is possible to upgrade your van every 3 years to maintain a warranty, cost may apply)
I own, a VAT registered Limited Company, what are the advantages to leasing a van?
It goes without saying, much like the benefits to a sole trader the fixed monthly payments and warranty also apply to limited companies, however, if the Ltd company is VAT registered, you may claim back the VAT every quarter.
I am thinking of personal van leasing, is this possible?
For some individuals the thought of owning a van outright may not suit them, preferring to swap every 2,3,4, or 5 years for a brand new model, in that case, finance lease may well be for you.
So what’s next?
It may seem like an obvious statement, but once you’ve decided to look into finance lease, the next step is to work out your deposit and monthly budget (naturally budget will dictate the make and model available to you).
Once you’ve done the calculations, I wonder…….
Which type of customer are you?
Customers leasing a van usually fall into one of three categories, which one are you?
1. I need a workhorse!
For these guys, they require a van for work, period! whether it’s cheap and cheerful or not, they want something that fits their budget and is solely for ‘the job’.
2. Work/lifestyle balance
Perhaps you’re one of these, you require a van that suits both work and family life. Monday to Friday your van carries you around with your tools and kit, but on the weekend it’s easily converted into the family taxi! 9 times out of 10 these buyers opt for a VW Transporter or Ford Transit Custom.
The final ‘type’ are looking for a lifestyle, their van is less about work and more about allowing them to lead the lifestyle they want, which is usually open roads and weekends away!
— ThePlaidZebra (@The_PlaidZebra) January 2, 2017
So, to recap:
The benefits of finance lease:
- Fixed monthly costs
- Minimal capital expenditure
- Low initial outlay if not VAT registered (when compared to other funding methods)
- No need to be VAT registered
- Lease payments from 24 – 60 months
- Flexibility to adjust balloon payment to reduce monthly payments
- No excess mileage charges or damage charges*
- Possibility to settle the agreement early
- Initial rental – monthly rentals and final balloon payment are up to 100% tax deductible.
(*Please note mileage and condition of vehicle will affect the final sale price)
A few other factors to consider before taking the plunge.
Running costs – Every van comes with a 3-year warranty, however running costs, wear and tear are solely your responsibility, when budgeting for finance lease, remember to include these costs.
Insurance – you must have fully comprehensive motor insurance.
Final balloon payment – The liability of the final ‘balloon’ payment remains with you, as stated above, excessive mileage and/or damage may have a negative effect on the resale / PX price of the van, should there be a shortfall you will be liable for that shortfall.
Please also note fluctuations in the market may also affect the final value.
Finally, as per the finance lease agreement, the vehicle must be sold to a third party – with that said, please note, should you sell the vehicle too early there is a chance of negative equity.
If, after taking all of that into consideration you would like to purchase a van on finance lease, what next?
Easy, speak to someone!
I can get loads of quotes online!
Yes, you can!
We too provide online quotes.
However, as you can see van leasing or finance lease has many variables, from deposit, miles per annum, the length of leasing, size of the final balloon payment, that any online quote, yes, including ours, are an ‘average price’.
To get an exact figure, nothing beats talking to a ‘human’, only then can you get the best price(s), and specific van(s) for your budget and/or requirements.
Before calling, note there will be a few details you’ll need to prepare.
As with any credit application**, and as part of the loan approval process, personal details will be passed to one or more finance companies, typically the details required will be:
- Full name
- Date of Birth
- Marital status
- The address(es) you have lived in the last 3 years
- Homeowner status – owner / tenant
- Telephone numbers of employees you have worked for, for the past 3 years
- Bank account number/sort code
So what are you waiting for?
Call us today on 01656 674 620
**Credit searches will be undertaken with one or more Credit Reference Agencies.
In the majority of scenarios, the Finance Company decision to accept/decline your loan application will be immediate although some applications might take longer to process.
Once accepted Swiss Vans Ltd will complete the necessary regulatory paperwork with you, making sure you have a clear understanding of the finance agreement you are entering into.
A copy of each applicant’s driving license (both parts) will be required to confirm your identity. you may also be asked to provide supplementary documents as part of the approval process.
Proof of comprehensive vehicle insurance may also be required (please note, the loan approval process for finance obtained via a 3rd party provider(s) may vary from the steps outlined above).