What to do if you own a van and want to lease
Leasing is a brilliant solution for many types of business people; salesmen, van users, car users and much more. There are many more pages on this site that reveal exactly why it's so good, which include:
*New vehicle: leasing allows you to take the newest model, every three years, for as long as you wish to continue leasing.
*Maintenance/servicing: For a little extra cost you can get maintenance included in the package; this might include cover for the cost of repairs and an annual service plan.
*Fixed monthly cost: at the time the lease is agreed, you know exactly what you'll be paying for however long the term exists.
So you might be reading this and thinking that it's time to consider leasing – but you own one or several vehicles, and need to work out your next step.
There are a number of factors to think about, such as:
Mileage: This is a major consideration, as the wrong decision could cost you. There's little point in paying for an extra mileage capacity per year if you don't think you'll need it, and conversely being overly conservative in your approach could hurt you if you go past it with a month or two to go.
A simple rule of thumb would be this: work out how far you've driven in each of the past year or two; assess whether the same volume of driving is likely; and apply this to your thinking. You need to be particularly wary if you're swapping your entire fleet over from buying to leasing, since a penalty will be incurred for any vehicles that exceed the limit.
Model: Your choice will be based on a number of factors; cost per month, efficiency, capacity, length/height, and more. There might not quite be an ideal one-size-fits-all vehicle, but there will probably be something close.
You might be able to equip yourself with a range of vehicles. As an example, you might go for a blend of Ford Transits – Custom, Courier, and one dropside. You might require different mileages for different vehicles (20,000 for one vehicle and 30,000 for another), and even different colours for different departments.
You might wish to lease one van personally, rather than with business in mind. For all calculations, take VAT into consideration and consult your accountant if necessary, remembering that you can reclaim up to 50% of the VAT on the finance and up to 100% on the maintenance.
Only you know what combination of specification you require, and putting together an itinerary makes sense. From there, it's worth contacting a number of lease van companies that can give you an overall idea of costs; if you like what you hear, give them a call. Take a look at reviews and social media to get an idea for their level of customer care. As with anything, shopping around makes common sense.
Selling your own vehicle: Once you've taken the decision to start leasing vehicles, you'll be thinking about offloading your own. It might be that you don't need to get rid of them all; maybe you'll keep some of the more efficient ones, or any that cost virtually nothing to insure and would not make you any money if you sold them anyway. Perhaps you'll lease a handful of vehicles to see if this is more economically sound, and then convert to leasing only further down the line.
Start budgeting/planning for the initial rental, which should be clearly explained on the site. This could be achieved through sales of your current vehicles; if leasing is economically more logical for your company, you could then be in a position to pump that money back into the business or at least attain more stable cashflow.
At the end of your lease?
It might be difficult to know now, four years before the end of the lease term, what you'll do when that term finishes. Will you start a new lease term on new vehicles, or will you purchase the vehicles you've been driving for the four years and move away from leasing?
Taking up a business contract purchase at the onset of the term will give you the option of buying at the end, as opposed to business contract hire.
Leasing means that you are renting the vehicle, rather than owning it – and that means that you have to return the vehicle in a suitable condition. The BVRLA – the trade body for the vehicle rental and leasing sector – has a set of criteria that you can use to assess your vehicle 10-12 weeks before you return it, and if necessary pay for any cleaning/repairs/refurbishment that will save on penalties.
Checking tyres, lamps, upholstered areas, bodywork and other parts of the vehicle will all be necessary. Of course, the best way of ensuring that this will not be necessary is to care for the vehicle while using it, rather than near its return.
Overall then, your approach is to do research, plan how you'll make the transition, and have an endgame. Using leasing correctly could save your company a lot of money, which can then be used elsewhere in the business, and save a lot of hassle transferring from older vehicles to newer ones.
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