The Advantages of Van Leasing for Small Businesses

18 07 2008

10 Advantages of Van Leasing for Small Businesses

Many businesses and individuals today choose to lease their vehicles rather than buy them outright. Car and van leasing offers many advantages that are particularly appealing to smaller businesses on a tight budget with limited financial resources. Van leasing will enable your business to have that smart new delivery vehicle much sooner than if you needed to save up for it. As a rule of thumb, if you like to change your van or commercial vehicle every 1 to 4 years then you may find that leasing is the cheaper option. However, if you like to keep a vehicle for around 5 years or more you are likely to find that purchase is your cheapest option.Here are just a few of the advantages of leasing your van or commercial vehicle:

1] Leasing May be Cheaper than Purchasing:
As mentioned above, this will depend upon a number of factors including how long you intend to keep the vehicle. If you are changing your van or commercial vehicle(s) every 1 to 4 years then leasing is likely to be cheaper than purchase but you will need to do a few simple calculations to determine what is best for you and your business;

2] Fixed Monthly Payments:
Having accurate knowledge of how much it is going to cost to provide the transport that your business needs each month is enormously beneficial, particularly to young start-up businesses with a need to accurately forecast costs and expenses;

3] Drive the Van or Commercial Vehicle of Your Choice:
Create the right impressions with your clients. Van leasing and will ensure that your business always has smart, reliable, up to date vehicles presenting a professional and successful appearance to your customers and clients;

4] Vehicle Value Depreciation Costs Minimized:
It is well known that new vehicles depreciate in value very quickly and very significantly. This depreciation in vehicle value can prevent a small business from regularly upgrading their commercial or business vehicles. Van leasing means that the costs of depreciation are generally borne by the leasing company;

5] Maintenance and Servicing Costs Reduced:
Keeping your vehicles on the road is another headache that can be alleviated by leasing your business vehicles. The maintenance contract may specify that the leasing company is responsible for all vehicle maintenance and repair;

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6] VAT may be Recoverable:
If your business is registered for VAT then you will be able to recover a proportion of the VAT paid on the monthly van leasing payments;

7] Minimal or Zero Initial Down Payment:
Unlike many purchase deals, van leasing does not always require that you provide a down payment up front. Although a deposit may be required for many van leasing deals this is likely to be much less than the down payment on a new vehicle, a significant advantage for many start-up businesses;

8] No Need to Sell Used Vehicles:
When you lease a van or a commercial vehicle the leasing company will generally take responsibility for the disposal of the vehicle at the end of the lease saving yet another headache;

9] Flexible Van Leasing Options:
Vehicle leasing contracts generally have a number or negotiable aspects such as maintenance, options for renewal, monthly mileage, contract period and final ownership of the vehicle. This flexibility should enable your business to find the right van leasing deal that precisely meets your requirements;

10] Shared Vehicle Management Responsibility:
Leasing your business or commercial vehicles means that you share the responsibility of managing those vehicles with the leasing organization. This can be a significant advantage for the small business where personnel resources are limited.

Whilst there are clearly some significant advantages of van leasing for small businesses there are a number of potential pitfalls that you need to be aware of:

1] Mileage:
Car and van leasing deals will often specify a preset monthly mileage. It is important that this is calculated accurately as excess mileage charges will be incurred if exceeded and these can sometimes be costly;

2] Wear and Tear Clauses:
Most van leases will specify that charges for wear and tear will have to be paid by the leaseholder when the vehicle is returned.

3] Modification Limitation:
It is not always possible to modify commercial vehicles or vans that are leased. The costs of returning the vehicle to the state it was in when first supplied must usually be borne by the leaseholder. These limitations should be specified in the lease;

4] Early Termination Costs:
Terminating a van lease contract early will sometimes mean incurring penalty costs.

Hopefully these notes regarding the advantages of van leasing, along with a few of the potential pitfalls, will help you to determine whether leasing commercial vehicles for your business is a sensible option. If you do decide to go for a leasing deal make certain that you take the time to ensure that the contract meets the needs of your business.

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