For businesses such as sole traders, partnerships and limited companies, van leasing offers an alternative, often cheaper, funding solution to buying a new van with a bank loan or dealer finance.
There are many benefits to van leasing vs buying as you can see here:
As a Sole Trader, there are also considerations that you need to keep in mind before entering a van leasing contract such as early termination charges, mileage restrictions, Fair Wear and Tear contracts, and insurance requirements. To help you decide if a leasing contract is right for you and your business, Nationwide Vehicle Contracts run through some frequently asked questions asked by Sole Traders when it comes to van leasing.
Of course you can. Business Van Leasing is open for any business as long as they can meet our requirements as a leasing company when it comes to financial matters.
It should be noted that, for both business and personal finance applicants, most funders ask for a good to excellent credit score in order to be accepted. So let's take a look at what they require.
When you apply for van finance, you will need to undergo a credit check as part of the finance application process. The information you supply on the Business Finance Application form is then used by the lender to make a decision about whether or not you are eligible for vehicle finance.
On the Business Finance Application form, you will be asked to provide the following information:
On top of this, in certain cases, such as your business being less than a year old or if you have been refused vehicle finance before, you may be asked to provide additional information such as:
To find out if you are likely to be accepted for finance, take our short Am I Eligible for Business Leasing quiz.
Another thing to consider is what sort of leasing contract you wish to enter into as there are different types of contracts available.
Finance lease offers both flexibility and tax advantages where you have a choice of how and when to pay - within reason.
You can choose to pay either the entire cost of the vehicle, including interest charges, over an agreed period; or you can pay lower monthly rentals that will leave with a final 'balloon' payment at the end that is based on the anticipated resale value of the vehicle. This latter option is particularly attractive to sole traders and companies in their infancy as it allows them time to build up finances to make the final payment rather than higher costs throughout the lease. Throughout the agreement, the vehicle remains the property of the leasing company.
The key benefits of finance leasing include:
Contract hire allows you to rent the vehicle in monthly instalments over the contract period before returning the vehicle to the leasing company for them to dispose of as they wish, leaving them to worry about depreciation values and disposal.
Throughout the length of the contract, the lender remains the owner of the vehicle, meaning the vehicle appears ‘off the balance sheet’ of your company (for companies that do not report under IASB). These fixed monthly rentals cover the rental of the vehicle, plus any maintenance options if chosen, and are calculated by taking into consideration the cost of the vehicle, the length of the contract, how much the vehicle is likely to be worth at the end of the contract, the Mileage allowance that you choose before the start of your contract, and any additional options, such as a maintenance contract.
The key benefits of contract hire for business include:
At the end of the contract, the vehicle is returned to the leasing provider, meaning you are then free to hire another vehicle or vehicles, without any financial obligation. Contract Hire allows you to concentrate on your business's activities, while avoiding the financial risk and administrative burden of owning your vehicle or fleet.
When it comes to Van Leasing, the tax benefits vary depending on the type of lease that you have taken the van on and whether you are VAT registered.
Yes you can, as long as it is taken off when the van is given back at the end of the contract, and any removals of it hasn't caused any damage to the van.
At the end of your lease agreement, your van will undergo a detailed inspection by the finance provider who will check the interior and exterior condition of your vehicle carefully for any damage that falls outside what is deemed as ‘fair wear and tear’.
This is any damage that has happened to the vehicle outside of any agreed normal use as stated in the terms and conditions of fair wear and tear that you sign at the start of the lease. If any excess damage is found, you will be liable for any charges, also known as “de-hire charges” or “lease-end penalty charges”.
To help make fair wear and tear guidelines clearer, the British Vehicle Rental and Leasing Association (BVRLA) provide a guide that you can see here to help make the rules clear, easily understood and fair.
Basically, the Fair Wear and Tear Guidelines concern: