It’s a question that crops up every time you want to trade out your van, should you buy or lease? There are pros and cons to each option and a lot of it will depend on your personal circumstances. To give you a clearer idea of what you should be considering, here’s what you need to know:
This is what most people focus on as it is the biggest immediate concern over getting a new van. You will find that buying a van does carry a slightly larger initial cost – unless you opt for finance – as you buy the vehicle outright and need to pay for tax and insurance. But the difference isn’t as big as you may think!
Most leased vehicles will have lower initial costs as they only require a deposit and the leasing company will pick up the cost of tax and occasionally insurance as well. However, some companies will require you to take out insurance with certain policy suppliers, which can cost you more in insurance costs per year.
Day to day running costs are typically the same, as you have to pay for fuel and general wear components – like wiper blades, tyres, engine oil and windscreen wash. The difference comes in if you have a breakdown, as a leasing company will repair the vehicle under warranty – or if you have a crash it will only cost you the price of the excess.
If you bought a new van then most repairs should be covered under warranty for the first 3-7 years depending on the manufacture. Additionally, insurance will cover any accidents that you may have at the price of the excess on your policy so not really giving lease vehicles a real benefit.
Used vehicles do not tend to carry a manufacturer’s warranty anymore and therefore you will have to pay for repairs – with older vehicles these parts will be widely (and often cheaply) available and garages will typically be experienced with the model. If you do opt to buy used then make sure you go through a reputable dealer in order to avoid buying a lemon.
Here’s where things really change. If you’re leasing a van then you’re paying a set amount every month into the van but you won’t be holding any capital in it as equity. This means that when it comes time to trade up you won’t get anything back for it.
When you own the vehicle outright then it adds equity which you can get back if looking to buy a new van or need capital to put towards your business. You also have the freedom to swap, modify and brand up your vehicle – things that could add or take away value depending on demand.
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Other Things to Think About
There are lots of things to consider other than costs, for example:
- Mileage limit – when leasing you are typically restricted to a certain amount of mileage per year. If you own the vehicle then you are free to travel as much as you want without worry of exceeding these limits.
- Modification – often you won’t be able to modify a leased vehicle with things like built-in racks, branding and additional security which can be a huge disadvantage if these are things you need.
- Penalties – if you scratch or damage a leased van you will often have to pay a penalty at the end of the lease. When you own the van outright this isn’t such a concern, although you may lose value when it comes to reselling.
- Final payment – one popular option of leasing is lease-to-own, as this gives you the perks of leasing with the option of owning the vehicle at the end. However, there is often a final payment amount you will have to pay that can make this option more expensive than simply buying the van in the first place.
For the large part, there are very few differences between buying and leasing except for the fact that you will not be retaining equity. Most businesses like the security of owning their own vehicles, as you have the freedom to do what you want with the vans and you add vital assets to your company. Often it works out cheaper overall, as you get money back when it comes to resale of the vehicle and general repairs will not cost as the monthly lease that factors this likelihood into account.
Budget depending, you are likely to get a fantastic used van for the amount that you would typically pay on a lease vehicle. Most small to medium businesses will choose this option as it is an additional asset and doesn’t increase the monthly running costs. Larger businesses tend to purchase large fleets and hire a management company to maintain them or alternatively, lease the vehicles from a separate company.
About the Author – Feeder Commercials is a Bristol based dealership selling a wide range of used vans, trucks and minibuses. If you’ve decided to buy rather than lease then visit Feeder Commercials online today to browse our current stock. All our vehicles go through an extensive 60 point inspection, ensuring their quality so that you know you’re getting a great deal for your money.