Thank you to our local business leasing customer, from Culcheth (Cheshire), for visiting the CarLease UK/VanLease UK team to arrange the collection and delivery of their new vehicle – the Nissan Cabstar.
An existing customer of ours for over 5 years, our customer is a milkman (a milk delivery driver to be wholly accurate!) and operates as a sole trader. Having found us online, our customer’s original query was whether or not we could lease a vehicle to a milkman? It is true that some industries and professions do bring about restrictions in terms of funding options and funding methods.
If you run a business which is likely to affect the condition of the vehicle, for example a builder carrying out “heavy use”, a butcher carrying meat or a private ambulance/funeral service, then you do need to think carefully about the finance company which you use and the funding method you utilise.
If you operate in an industry which is likely to affect the condition of the vehicle, you have to consider if a contract hire arrangement would be suitable for. Bear in mind that contract hire is a usership-style product and the vehicle will be returned to the finance company at the end of the contract. The vehicle is inspected by a collection agent and they will identify an issues, marks, scratches which fall outside of the BVRLAs fair, wear and tear guide.
So if a milkman is looking to lease a vehicle, should they contract hire it? This may have some advantages, including:
· Fixed contract available – between 24 and 60 months (you choose what suits your needs and requirements);
· Low initial rental available – it is not compulsory to utilise big “deposits” in order to lease a vehicle and it can therefore be cash-slow efficient;
· Low risk – at the end of the contract, the vehicle is returned. If the vehicle is not worth what the finance company expected, this is not passed across to the customer;
· Fixed costs – if you include a “funder-maintained” contract, you can incorporate the cost of all servicing, maintenance and tyres. All your costs, apart from fuel and insurance, is included;
· Tax efficient – if applicable, you can reclaim 100% of the VAT on the rentals and 100% of the monthly rentals against corporation tax; and
· Road fund licence included for the duration
There are some obvious disadvantages, including:
· Fixed contract – you cannot exit an agreement without cost. As it is fixed, you have to “early terminate” the agreement, which involves paying half of the remaining rentals;
· Collection charges – if your vehicle does not meet the BVRLAs fair, wear and tear standards, you may be charged;
· Mileage – the price you pay is based on your annual mileage. This is set at the start of the contract and it is not always possible to change it. You will be charged for any excess mileage after the vehicle is collected;
· You cannot purchase the vehicle – contract hire is not an ownership-style agreement. If you want to own a vehicle or buy it (and you are certain of this), contract hire is not suitable for your needs and requirements.
A contract hire arrangement is suitable for those van drivers who need certainty.
If you have a milk-delivery contract for a 2 or 3 year term with a particular dairy, you can organise the vehicle contract around this term. As discussed above, you can use low-initial rental (even no initial rental/no deposit) to manage cash-flow and include your servicing/maintenance to ensure there are no surprises.
In contrast, if you crave a little more flexibility with your funding method or if you think the vehicle is going to incur heavy-use, you may want to consider another funding method, known as finance lease, which offers some of the benefits of ownership.
For a milkman, a finance lease arrangement could offer:
· No collection charges – at the end of the contract you will either sell the vehicle or refinance the final rental (balloon). The vehicle is not going back to a finance company and therefore no one will inspect the condition of the vehicle;
· No excess mileage charges – as per above, there is no inspection of the vehicle. The mileage the vehicle covers will inherently affect the value of the vehicle. However, rather than being charged in a lump sum at contrast cessation, this is something which is managed by the customer at the end when they sell/re-finance the vehicle;
· Ability to exit the agreement early – unlike contract hire, you will be provided with a settlement figure to exit the contract. If the vehicle is valued at this amount, you will be able to exit the arrangement without cost (with contract hire the vehicle’s value is irrelevant);
· Ability to explore ownership – at the end of the contract you can refinance any final rental/balloon and therefore keep the vehicle beyond the contract term; and
· Available on no/low initial rental – it is not compulsory to utilise big “deposits” with finance lease.
This is not to say that every milkman should finance lease a vehicle. While there are clearly more flexible attributes to the funding method, there are some inherent disadvantages too:
· Road Fund Licence – this is included for the 1st year only. Thereinafter, you must satisfy this (the finance company organise and you pay);
· You cannot own the vehicle – while the product is ownership in style, once you have paid the final rental/balloon, you must continue to pay a peppercorn rental. The vehicle must ultimately be sold to a 3rd party; and
· Ownership risk – if the vehicle is worth less than the final rental/balloon, you will end up in “negative equity”. There are no protections for this and you have to satisfy the final rental regardless.
There is no right or wrong answer when you are leasing a van for work.
Try to consider your daily routing and working style and then utilise a funding-method and finance company which you think will best meet your needs and requirements.
In terms of the vehicle shown here, the Nissan NT400 CABSTAR SWB DIESEL 34.13 dCi Dropside (Manual), this is based on the following configuration:
· Arctic White Solid Paint
· Cloth – Black
· 15″ Steel Wheels
· Single Rear Wheels
As standard the vehicle includes tinted glass and windscreen, ABS, emergency brake assist, Bluetooth, electrically adjustable door mirrors, USB connection, daytime running lights, fog lights, alarm, immobiliser and a full size spare wheel. The only additional options are air conditioning for the front plus a choice of metallic paint colours.
On the technical-side, the vehicle has a list price of £24,080.00 plus Vat. The 2953CC 6 speed manual diesel engine produces 130ps. Service intervals are long-life; every 24 months or 24,000 miles, whichever lands sooner.
Other key points about the Nissan Cabstar NT400 to note are:
· Height – 2122mm;
· With (including mirrors) – 2265mm
· GVW – 3400kg
· Minimum kerbweight – 1687kg
· Seats – 3; and
· Max towing weight unbraked – 3500 kg.
So would the Nissan be your perfect dropside? With the Ford Transit dropside also available and cheap to lease. You may also want to consider the small Toyota Dyna… After all there are some great dropside options for the customer!
Find the web best van lease deals @VanLease UK – or – read some more commercial van leasing posts below.
