All you should know about leasing a van

bobbyjones| February 10, 2010 | No Comments

When it comes to understanding the various differences between leasing agreements, it can be quite demanding for the sharpest of minds. What are your best options? Would you be wiser enter into a straight rental agreement?

Hire purchase

When you take out a hire purchase agreement, you will be paying a deposit equivalent to 3 months of the overall rental in advance plus VAT. Repayment periods vary, but a typical one could be 36 months up to a maximum of 60 months. All of your monthly payments are exempt for VAT, and you can reclaim your initial charge on the deposit. Another favourable point is the offsetting of taxable profit which is a huge bonus to any small business. When the lease contract has finished, the van is yours and there are no more charges to pay.

Finance Lease

When you take out a finance lease agreement, you will be paying a deposit of 1 to 3 months of the overall rental in advance plus VAT. Similar to the hire purchase agreement, your repayments are usually between 36 and 60 months in total. If you are able to claim back the VAT on the deposit, you will only be able to do this on a quarterly basis. One appealing freature is if the van is sold or part-exchanged at the end of the term – 96% of the van value is retained by the lesse.

Contract Hire

Many aspects of this type of arrangement are the same as the finance lease, with the added bonus of a maintenance package. There is none of the hassle for the customer of having to sell the van when the lease term has finished. It is sometimes known as an Operating Lease. Most of the rules are the same as the other options above, including deposit cost, VAT recoverability etc. So long as you stay within your agreed mileage, you can fix your costs and retain budgetary control of your agreement.

Lease Purchase

Most of the details are the same as the finance lease agreement. Where cheap van leasing differs, is at the end – you sell the vehicle to a third party for a reasonable value and buy it back for £1. Forward an invoice to the finance company with a cheque for 5% of the sale. After writing down 100% of the cost of the deal, you are then able to keep the van.

Iveco Van Leasing Is just another of the many options that are available to choose from.

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