How to lease a van explained
If you’re looking for a new van, leasing is definitely an option to consider. Here’s our complete guide on how to lease a van so you have everything you need to know.
What is van leasing and how does it work?
Van leasing isn’t as complex as you may think. It’s the same as any lease agreement – essentially a long-term rental.
You pick your van, choose how long you want the agreement to last, make a deposit if you wish, then pay monthly instalments to have access to the vehicle.
Then, when your contract ends, you simply hand the van back. You’re then free to walk away or start a new agreement if you wish.
Advantages of van leasing
There are a wide range of benefits when you choose to lease a van. We’ve included some below.
Low monthly payments
With a lease, your monthly payments only ever cover the depreciation of the vehicle’s value while you’re driving it. That means you never cover the total cost of the van.
Due to this, your monthly payments are usually lower than other types of finance and you end up paying less than if you choose to buy it outright.
With a van lease, all your monthly payments are fixed, so you always know how much you’ll have to pay and can budget accordingly.
£0 deposit options
Here at Zero Deposit Car Leasing, all our vans also come with the option of a £0 deposit; meaning you can escape any big upfront payments.
Change your van every few years
A lease agreement isn’t meant to last forever. It’s for a set period, and when that time is up, you’re free to change your van to a newer model or something completely different.
That means you’re always driving the latest in style, safety and technology.
Enjoy your van in its best years
As lease agreements are usually on new or nearly-new vans, you can take advantage of all the great things that come with it, such as the van being more efficient, having the latest tech and typically the security of the manufacturer’s warranty.
Avoid owning a depreciating asset
As you never own the van with a lease, you don’t have to worry about losing money through depreciation.
At the end of your contract, there’s no worry about how you’re going to sell it and how much you’re going to get back, you simply hand the van back and walk away.
Disadvantages of van leasing
Despite the many advantages of leasing vehicles with us, there are certain downfalls in leasing a van that you should be aware of before going ahead.
You never own the van
If owning the van is important to you, leasing may not be the right type of finance for your needs.
With a lease, you never own the van, which means you have to be careful about any customisations or damage – as it may end up costing you later down the line.
With most lease agreements, there are mileage restrictions that you need to keep to.
At the start of your contract, you’ll agree to an annual mileage – which helps determine your monthly payments, among other things.
If you go over your agreed mileage, when you hand the van back, you’ll likely face an excess mileage charge.
Need to take care of the van
When you return the van at the end of your lease agreement, the lender will expect it to be in the same condition as when you took it, minus any fair wear and tear.
That means any deliberate damage will have to be fixed before you hand it back, or you’ll face charges.
And it also means you’ll have to remove any customisations before giving it in, such as performance enhancers or signage, or again, you’ll face a penalty – even if they add value to the van.
Who can lease a van?
As with any lease agreement, there are restrictions on who can lease a van. The criteria includes:
- You must be 18 or over
- You must hold a full driving licence
- You must be able to pass a credit and affordability check
If you’re worried about any adverse credit or the credit check, don’t be. At Zero Deposit Car Leasing, we work with a wide range of lenders who can support you if you have less than perfect credit.
Also, all our initial checks are soft, meaning you can find out if you’d be eligible for a van lease without it harming or showing up on your credit file.
Find out if you’re eligible for a van lease today with our quick and easy online application.
Types of van leasing
There are two types of van leasing available – personal contract hire, otherwise known as personal leasing, and business contract hire; business leasing.
Both work in a similar way but there are differences. And it’s important to know which is right for you before going ahead.
Personal contract hire
Personal contract hire, or PCH, is ideal for individuals who want a van for personal use or those who aren’t part of or own a business.
Business contract hire
Business contract hire, or BCH, is for sole traders, partnerships and limited companies who are looking to lease a van.
What happens at the end of a van lease?
At the end of your van lease, the process is fairly straightforward.
Usually, you’ll be notified by the lender when to return the vehicle and where. There’ll typically be an independent appraiser to greet you and to take a look around the van to ensure its returned mileage is under the pre-agreed figure and that the vehicle hasn’t got any damage outside of fair wear and tear.
If all is ok, that’s it. You walk away and are free to start a new contract if you wish.
If you’ve exceeded your mileage, however, or there’s any ‘deliberate’ damage to the van, you’ll be notified of the excess charges in due course and will need to pay these off to end the agreement.
How does van tax work?
Van tax is straightforward but also a vital component of how a van lease can benefit businesses.
A term to understand is company van tax; or Benefit-in-Kind (BIK).
BIK is taxation that prevents employees from using a business van as a personal leased vehicle. This may restrict how you can use your van in everyday life.
If you’re an employee, the tax only applies if you use the van for private journeys. For example, if you only drive the van for business journeys, as a pool van (where you share the vehicle with more than one employee) or for minor detours such as buying a newspaper or stopping off for food on a long journey, then you’ll be exempt.
If you’re self-employed or a sole trader, you’re also exempt.
However, if you’re an employee and use the van for journeys that are classed as significant – school runs, weekend shopping trips or going to a family member’s house for a night – you’ll incur a Benefit-in-Kind tax.
As things stand, the flat rate in the UK for BIK is £3,500, with there being an extra £699 charge if your employer also covers your fuel costs.
Leasing a van with financial difficulties
If you have bad credit or are worried about affordability, leasing a van may seem daunting.
However, we work with a wide range of lenders who understand that not everyone has a perfect credit score.
We work hard to find the best and right deal for you. So if you have bad credit or other marks on your file, don’t worry, we can still help.
To make it easy, we’ve created our free only eligibility checker, so you can find out in minutes if you’ll be approved for a van lease without harming your credit score.