Coupled with this, is a dedicated team here at CarLease UK / VanLease UK who can help you to administer your fleet in a professional and cost-effective manner.
The phenomenal growth of leasing has definitely touched the commercial market too. We do get asked many questions from our customers about whether or not they should lease a van. The first thing to consider when looking at “leasing” is to properly define what financial product will suit you, or your business.
With contract hire, you have the ability to use a van for a period of 2,3 or 4 years, based on a pre-arranged annual mileage and this can include all servicing, tyres and maintenance (known as funder-maintained arrangement). The van will never be yours to own, as contract hire is not an ownership-style product. This is very much about those customers who want to fix their cost on their vehicle for a specific period of time. In particular, customers with low-use and low-mileage like Florists or business with a local delivery element, will often look to contract hire. However, for those vehicles which are likely to incur heavy-use, like butchers, builders and couriers, you do have to carefully consider the product.
At the end of the contract the vehicle will be appraised and any damage which exceeds the industry standard fair, wear and tear will be passed to the customer – this could create substantial charges at the end of the term.
With contract hire, this is a fixed term product, so if your circumstances do change during the course of the agreement, you will have to pay an early termination fee, often equivalent to half of the remaining rentals. Contract hire is not a product you can simply walk away from.
As an alternative, “leasing” can also encompass a product known as finance lease. Unlike contract hire, you do have the ability to enjoy some of the ownership-style qualities which this finance product affords. When you agree a deal on a finance lease you should be presented with an initial rental, monthly rental and final rental (or balloon). That final rental is a calculation based on your term and mileage and is a sum which MUST be paid to the finance company at the end of the contract. What you, or the company, must do is sell the vehicle at a commercial value to a 3rd party (i.e. not you or a family member). As the vehicle is not being inspected or returned, the value at the end of the contract is down to you. If the vehicle has incurred heavy-use this will be reflected in the sale price you are likely to receive. Additionally, financial lease (like contract hire) offers certain tax benefits that many companies can utilise – you can reclaim all of your VAT on the rentals and you can also claim back the rentals against corporation tax.
There is no right or wrong answer for leasing a van. It is very much a case of you understanding the benefits and disadvantages of each finance product and making an informed decision.
Check out some of the best van lease deals on our sister website VanLease UK