7 Things To Consider When Leasing A Van For Business

7 Things To Consider When Leasing A Van For Business

Whether your business has a fleet of over 100 vans or you are a sole trader with just one van at your disposal, that van is a significant investment for the business and is the lifeblood of how you operate. Essentially the business couldn’t function without a van and hence you need to consider how to source and finance a van very carefully.

Leasing a van is the most cost-effective method of motoring for your business, whether you are a fleet manager looking after lots of vans, or you are self-employed and only have one van to worry about. But even if you are already sold on leasing a van over buying one, there are lots you need to consider when deciding how to manage a business leasing deal.

1. You will need good credit

With a van leasing deal you are making a financial commitment which you will need to keep up with, but at the same time the van leasing company will need to be satisfied that you have the financial capacity to manage that commitment. So you will need to undergo a credit check of some sort to establish how good your credit rating is. This will probably mean that you will need to supply information such as your turnover and trading results and possibly your bank statements.

2. There are different tax benefits for vans

A VAT-registered business can claim back 100% of its VAT for a van leased for business use. And the company car tax rules for vans differ to cars, in that if the van is used for business use and a commute, you can still claim 100%. Also, for cars, the company car tax is charged on BIK rates which are based on CO2 emissions and the P11D value, but for vans this is a fixed rate which doesn’t change regardless of usage or value. Pool vans are also exempt from company car tax. A pool van is used by more than one employee, is only used for business purposes and is stored at the business overnight. One other tax factor to consider is that road tax is usually included in the monthly cost you pay the leasing company.

3. Improve your cash flow

Because you are paying only for the depreciation value of the vehicle over the length of the leasing contract, your monthly outlay is reduced by leasing a van. You can also tailor this cost based on your mileage. And the fact that the cost is fixed and there are no balloon payments to plan for in order to buy the van, means that it is much easier for the business to budget for this cost and manage its cashflow.

4. The monthly cost depends on you

Of course the monthly cost will differ depending on the type of vehicle you choose and how much of a deposit you can afford to put down. You can also reduce it based on your mileage. The less mileage you plan to do, the less you will pay in leasing costs, because the wear and tear through depreciation will also be less. And if you manage this well you will avoid excess mileage charges that will apply if you drive more than the agreed mileage or if you return the vehicle with excessive wear and tear.

5. Leasing teaches you to manage driving

The mileage restrictions included in a van leasing deal mean that you need to carefully manage the mileage you or your drivers are doing. This is harder for a fleet of vehicles of course, but it does mean you need to track vehicles, manage route planning better, manage driver behaviour better and generally find more efficient ways to use the van. Ultimately, this will help the efficiency and workflow of the business and cut costs from your bottom line.

6. Find a van that is practical

Vans come in all shapes and sizes now but you need to make sure the van you choose is suitable and practical for your business. This comes down to fuel efficiency and the type of mileage and driving you will be doing, but also, can you load and unload people, tools, machinery, materials and equipment easily? Is there enough weight capacity? Is it comfortable for passengers on long journeys? Is there enough storage space?

7. Have you considered an electric van?

It wasn’t long ago that electric vans were a non-starter in terms of mileage and charging practicality for a business, but that has all changed and most of the major vehicle brands now offer a powerful, reliable and cost-effective electric van. Of course you are reducing your climate impact by leasing an electric van, but you can also save on fuel costs and paying no road tax on an electric vehicle too.

You can talk to our leasing experts at Pink Car Leasing about how van leasing deals are constructed and the things you need to think about. We can also help you with the great van leasing deals we have on offer, so contact Pink Car Leasing today.