Should I buy or lease a van?
Buying or leasing a van both offer very different propositions.
On the one hand, buying brings with it ownership and resale value, but it also comes with depreciation, maintenance costs and the hassle of what to do with it when you want a new model.
Leasing meanwhile is a cheaper alternative and gives you much more flexibility, but there are mileage restrictions and other contract elements you need to think about before going ahead.
So, should you buy or lease a van? Read our complete guide to find out which is the best option for you.
Difference between leasing and buying
The difference between leasing and buying is remarkably stark considering both essentially give you the same thing.
It can be confusing if you’re not experienced with one or another, but it doesn’t have to be.
When you buy a van, you own it after you’ve completed any finance agreement. That means it’s legally yours, so you can do what you like with it.
With a lease meanwhile, you never own the van. It’s essentially just an affordable long-term rental.
When you own the van, there aren’t many restrictions you face. You can adapt it, you can go without servicing, it’s yours.
However, when you lease a vehicle, you must keep within the terms of the contract or potentially face extra charges. We’ll go into these a little later.
If you choose to own a van, you’ll have to pay the total price either upfront in cash, through a hire purchase agreement or via balloon payment at the end of a PCP deal.
Meanwhile, when you lease, you only cover the van’s depreciation during your term, so you end up paying a lot less for the same thing.
How long you can drive it for
When you own a van, you can choose when you’ve had enough and either sell it or trade it in.
With a lease, though, you drive the van for a set period then hand it back to the lender.
Advantages of leasing
When you lease, you get access to several benefits, some of which we’ve laid out below.
Low monthly payments
Leasing is the cheapest way to get access to the van you want.
As you only ever pay for the depreciation, rather than the total cost of the vehicle, you end up covering a fraction of the vehicle’s worth.
Against having to pay for the whole van upfront or on a different type of van finance, leasing can help you save significant amounts of money.
As you don’t own the van when you lease it, you don’t have to go through the hassle of getting rid of it when your contract ends.
You simply hand it back to the lender, and if you want to take out another lease deal you can – providing you meet the lender’s criteria at the time.
Drive the van in its best years
Most lease agreements are available on new or nearly-new vans. That means you get access to the vehicle during its best years – when it’s most efficient and when less is likely to go wrong.
Even if there’s an issue, as you usually lease a new or nearly-new van, it’ll likely still be covered by the manufacturer’s warranty so you don’t have to face any repair costs.
If you’re using the van for business that’s VAT registered, you can claim up to 100% of the VAT back from your monthly repayments.
Disadvantages of leasing
Of course, as with any financial agreement, there are also disadvantages of leasing you should be aware of before going ahead.
All lease agreements come with an annual mileage allowance which restricts how many miles you can drive your van over the term of your contract.
You decide how much you’d like at the start of your contract, but if you go over, you’ll face a pence-per-mile charge.
Never own the van
While some will see it as a positive, you may consider never owning the van as a negative. You can’t make any of the money you’ve spent back, and you can’t use it as a deposit on a new vehicle later down the line.
When you lease a van, you need to think about the condition it’s in when you come to return it.
The lender will expect the van to be returned in a similar condition to when you took it, minus any fair wear and tear as defined by the BVRLA.
That means if you want to add signage to the van for a business or add a towbar, you’ll need permission and maybe return it back to its original condition before handing it back or you could face extra charges.
Advantages of buying
Like leasing, if you choose to buy a van, it comes with its own advantages.
Of course, the main benefit of buying is you own the van outright. That means you can do what you want with it, including making modifications or selling it on when you’ve had enough.
You decide when you want to change vehicle
Unlike a lease which is a set contract – from which there are significant charges if you want to end it early – when you own a van, you have complete control as to if and when you want to change it.
As there are no mileage restrictions – as there are with a lease – you won’t face any excess changes if you choose to drive 10,000 or 100,000 miles a year.
The van is yours, and you can drive it where and when you like.
Like leasing, if you’re a business owner, there are tax benefits to enjoy.
When you buy a van, you can claim capital allowances against the outright purchase of a vehicle. This reduces your income tax, helping you save.
Disadvantages of buying
As we mentioned earlier, most financial decisions come with some disadvantages. And buying a van is no different.
The biggest disadvantage of owning a van is the fact it’ll most likely lose value while you do.
Except in extremely rare circumstances, all vehicles lose some of their value during ownership.
So, not only are you paying for the entire vehicle when you buy it, but you also won’t make a lot of that back when you come to sell it.
As you own the van, you’re completely responsible for everything, including servicing and maintenance.
And if you want to keep your manufacturer’s warranty intact, you have to keep the vehicle serviced regularly.
Lack of flexibility
With a lease, you’re essentially guaranteed a new vehicle every few years – providing you meet the lender’s criteria when you make your next application.
However, when you own a van, you need to keep it for at least a few years to get any sense of value.
That means you’re tied to a depreciating asset, and if you want or need to change it you may find you can’t afford to or you end up losing out on a lot of cash.
And finally, a very substantial disadvantage of buying a van is you have to have the capital available to own it outright.
Should I buy or lease a van?
So, should you buy or lease a van? Well, the final decision always comes down to what suits your circumstances best.
If you’d rather have low monthly repayments and you’re not bothered about owning the van outright, then leasing is your best option.
Meanwhile, if ownership is important to you and you can afford larger repayment, a Hire Purchase might be your best option.
If you’re still unsure, our expert team are on hand to help you find the right van and funding option for you.
Just get in touch with us over the phone, online or via email.
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