You need a new van for your small business. It’s probably one of the biggest investments you’ll make in your company, but should you buy it outright or lease it? Each method has its own upsides, yet sometimes identifying these amid all the noise of the marketplace can be tough.
Let’s look at the differences.
Buying a van
Buying a car after learning to drive is an open and shut case – you have a car to call your own. Buying a van for your business means that, yes, the van is yours, and that brings its own subtle advantages to your overheads.
You’ll be free of tight restrictions on how and where you can drive your van, and if you want to modify it or plaster your company name on the side, you can. It’s your property, no one else has any claim on it.
Happily, you can also claim capital allowances which will help to lower your income tax. There’s a helpful overview on Gov.uk. And if you need to boost your coffers quickly, you can always sell the van on.
Bear in mind you’ll be responsible for:
- Maintenance, including servicing, repairs and general upkeep
- Legalities, such as road tax and insurance
These might be costs you can’t absorb yet as a fledgling business, and a breakdown or even a write-off could be disastrous, but if you’re a little more established these shouldn’t pose too big a problem.
Leasing a van
The biggest draw of leasing is that you won’t need to fund such a big cash outlay. Upfront expense is avoided by spreading the cost over a set period, and although you’ll need to provide a deposit, it won’t be anywhere near what you’d pay outright.
Maintenance costs are usually covered by the company you lease from, so that might be a load off your mind in the long run. You may even be able to buy the van after the fixed term contract ends, for a small fee.
Downsides? Well, you’ll probably be subject to some restrictions such as how many miles you can drive and what you can actually do with it. So an unexpected trip to the other end of the country may just tip you into breach of contract!
By leasing a van, you’ll be subject to:
- Mileage limits and heavy fines if you exceed them
- Lengthy contracts that may not fit in with your long-term plans or give you much flexibility
- And a payment plan that will usually end up costing more than buying the van outright
It’s safe to say then that while buying your van offers you more freedom, leasing could, in many ways, give you greater peace of mind. It’s a case of weighing up where your business stands and picking the deal that suits you now and two or three years down the line.
This article is in association with Benjamin Campbell