Leasing Vs Buying a new van

[Gnome of the Woods]

I am starting to have more say in the our small family business, but know very little about the pro's and con's of the acquisition of a new van.

We have always paid cash before,

We normally replace the van every 5 years, but due to the diff looking like its on its way out we may replace it a year early.

I know my father has a thing about taking out any form of credit.

I would just like a quick run down of the pro's and cons of both from someone who knows.

We are VAT registered.

 

Thanks, in advance,

 

Paul

[kent]

Lease is more tax/vat efficient. However the payments push your break even point up, so your dad is also holding a point. If business is good and the future looks bright lease/ full service contract hire is ok and it can free cash for other improvements in the business. Remember though if these vans get a hammering on building sites etc. you will be responsible for making good all those faults on return.

[sheene7]

Our firm has leased 2 vans & 2 cars for the last 2 years. But the boss announced the other day that when the lease expires in september he will buy the next vehicles , I think the fact that he was stuck with a VW Touareg, when the CEO was sacked , that was costing him almost £1000 / month and he had to pay something in the region of £15 - 20 K to get out of the agreement , has left a sour taste in his mouth.

[crossy 666]

alot also depend on the mileage you willbe doing in them aswel

[Rupert]

I have bought in the past using hp

 

You put down your deposit and all the vat,i know the vat ends up back in the bank but sometimes you cant buy on the last day of the quarter.

So van 20k vat 4k you put down 10% as a deposit so that's 6k of which you claim 4k back in vat

You the claim writing down allowances of a proportion so year one you get 5 k of ya taxable profit.

yearly amount diminishes as the vehicle ages.

The vehicle is your to sell at any time subject to settling the finance and yours after the last payment to own/sell pass on to lower employees.

Payments are higher than a financelease unless deposit is large

 

I also have finance leased

deposit is low

Vat is paid monthly and claimed back as such

100% od monthy rental is allowable against tax

You can still sell at any time

It is more difficult to own the vehicle at the end of the term most just trade it in for a new van

Very cost effective for higher end vans like transporters or vitos

So for a 20k van you would prob put down 1200 and pay 300/350 pcm plus vat all of wich is deductible

 

I just took a VW t5 lwb on a least for 400 pcm with 1100 deposit over 4ys with money from vw at 1.1%

Same van was 500 a month with 5k down on hp.

 

If you intend to swap regular say 3 or 4 yrs then lease

If you want to keep till it dies or becomes unecomic to repair then buy.

[al4x]

leasing gives you more control on variable costs but it does depend how many miles you do as to how effective. We used to have vans through norflex and for vehicles that did 70-100k a year it worked for us price wise and we knew there wouldn't be any big bills and a new vehicle every 2-3 years. You do pay for it but by the time all you pay is insurance it works if your mileage is high enough.

[Gnome of the Woods]

Thank you for the replys.

Interesting stuff to get my head around.

Average milage is 20k a year.

 

Regards,

Paul

[figgy]

Your probably better off buying a van at that mileage but try and get a longer warranty. Or sat the end of the warranty sell px and get another. You can still offset a good amount against your tax.

 

Figgy

[Rupert]

What vans are you looking at?

Residuals really strong on VW transporters 20k a year still be ok on a lease.#

 

I suggest you ring a dealer and get both lease and HP quotes on the van and take it from there.

 

I leased a 26K Vw for 700 down(vw gave me 500) and 350 pcm my plan being to trade it for another in 18/24mths I also do 20k a year.Figures plus vat.

Edited February 5, 2014 by Rupert

[pegasus bridge]

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