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Poll

I am thinking of getting a new van, which option is best in your opinion?

Hire Purchace
64.7%
11 (64.7%)
Finance lease
29.4%
5 (29.4%)
Contract Hire
5.9%
1 (5.9%)

Total Members Voted: 15

steve123

  • Posts: 267
Which Contract for a new van
« on: May 22, 2013, 04:17:00 pm »
I have been looking at buying a new van but cant decide which of the above options is best.

My company is Ltd and Vat registered so want to get it right but its all a bit complicated.
Anyone tried any of the above and if so whats your opinion.

gavinb

Re: Which Contract for a new van
« Reply #1 on: May 22, 2013, 04:40:21 pm »
Ask the accountant .

steve123

  • Posts: 267
Re: Which Contract for a new van
« Reply #2 on: May 22, 2013, 04:59:16 pm »
Ask the accountant .
Yeh thought about that but he will only give me his opinion from a financial side. Although that's important and probably the deciding factor i just wondered if there were other angles I should consider.

Ian101

  • Posts: 7887
Re: Which Contract for a new van
« Reply #3 on: May 22, 2013, 05:45:55 pm »
do you want it off balance sheet if yes then consider contract hire over lease

Spruce

  • Posts: 8452
Re: Which Contract for a new van
« Reply #4 on: May 22, 2013, 08:19:32 pm »
do you want it off balance sheet if yes then consider contract hire over lease

 ;D      Might make the business more attractive to potential investors when launching it on the stock exchange.
Success is 1% inspiration, 98% perspiration and 2% attention to detail!

The older I get, the better I was ;)

Spruce

  • Posts: 8452
Re: Which Contract for a new van
« Reply #5 on: May 22, 2013, 09:02:42 pm »
Seriously, most businesses at one time tended to buy vans outright (or finance them) and lease the cars, although the likes of Northgate are changing that perception. Leasing a van is becoming more popular as it requires less initial outlay to get a vehicle on the road.

Being LTD and VAT registered could probably mean you have a couple of employees, although not necessarily. Vans were treated as an asset on the books, generally due to the nature of the way that staff treat them. This was especially true in the building industry where a finance house wouldn't consider a contract hire agreement with vans to them.

What you have to consider is what you want at the tail end of the agreement. It's great having a lease with a large balloon payment at the end as this reduces your monthly rental, but what happens if the van, for whatever reason, doesn't fetch the value is was expected to 3 or 4 years previously when the agreement was drawn up? This can put you under a lot of pressure financially. What about over mileage charges? What about the cost of making right that 'non wear and tear' damage, dents, bumps, scratches, etc. (If anyone does choose to lease a van, get a copy of what their 'wear and tear' conditions are, read them and understand them before you sign anything.)

Some people loved the thought of a low monthly repayment, but then they started to have second thoughts as they were now handing a vehicle back with value that they had paid for every month with now nothing to show for it.
Leasing is about financing a depreciating asset. Whichever way you choose to finance a new van, once purchased it will always depreciate and you will be left with something of much less value at the end of the day.

Each finance deal has its pros and cons. You need to identify what to you are pros and what to you are cons. I might have a totally different opinion to you on the same deal.
Success is 1% inspiration, 98% perspiration and 2% attention to detail!

The older I get, the better I was ;)

Dani J

  • Posts: 421
Re: Which Contract for a new van
« Reply #6 on: May 22, 2013, 10:12:58 pm »
Seriously, most businesses at one time tended to buy vans outright (or finance them) and lease the cars, although the likes of Northgate are changing that perception. Leasing a van is becoming more popular as it requires less initial outlay to get a vehicle on the road.

Being LTD and VAT registered could probably mean you have a couple of employees, although not necessarily. Vans were treated as an asset on the books, generally due to the nature of the way that staff treat them. This was especially true in the building industry where a finance house wouldn't consider a contract hire agreement with vans to them.

What you have to consider is what you want at the tail end of the agreement. It's great having a lease with a large balloon payment at the end as this reduces your monthly rental, but what happens if the van, for whatever reason, doesn't fetch the value is was expected to 3 or 4 years previously when the agreement was drawn up? This can put you under a lot of pressure financially. What about over mileage charges? What about the cost of making right that 'non wear and tear' damage, dents, bumps, scratches, etc. (If anyone does choose to lease a van, get a copy of what their 'wear and tear' conditions are, read them and understand them before you sign anything.)

Some people loved the thought of a low monthly repayment, but then they started to have second thoughts as they were now handing a vehicle back with value that they had paid for every month with now nothing to show for it.
Leasing is about financing a depreciating asset. Whichever way you choose to finance a new van, once purchased it will always depreciate and you will be left with something of much less value at the end of the day.

Each finance deal has its pros and cons. You need to identify what to you are pros and what to you are cons. I might have a totally different opinion to you on the same deal.

Well explained spruce, welcome back  :)

windiewasher

  • Posts: 4393
Re: Which Contract for a new van
« Reply #7 on: May 23, 2013, 07:00:28 am »
Save up and buy one.if you cant afford it then dont bother. ;D
Takings off all first cleans till march 7th 2014
October  total=  cleaned  extra per month
November = cleaned extra per month
Total £  so far.

Spruce

  • Posts: 8452
Re: Which Contract for a new van
« Reply #8 on: May 23, 2013, 07:09:21 am »
Adding to this, most soletrader type customers who came into the dealership and asked for a leasing quote were under the impression that no credit checks were done on their credit history.

They thought it was like going into Hire Service Centre and hiring a tool for the weekend.

Anyone with a poor credit history will probably not be accepted for a contract hire/lease agreement.

If you do enter into a lease agreement with a final balloon payment, you must ensure that your insurance covers the full finance settlement value (different from actual van value) in the case of the van being written off in an accident during any stage of the leasing term. This may mean you have to take out an additional GAP type insurance to cover the difference between the settlement value and actual van value. You also need to ensure that all your equipment in the back is also covered.

Servicing is also an important consideration when leasing a van. The servicing is required to be done according to the vehicles servicing schedule at a recognised garage, usually at the main dealership. Any replacement tyres are to be replaced with the original manufacturers specifications ie Michelin for Michelin. If you do a low annual mileage, then the van would be serviced annually. You will be responsible for a final service just before the van goes back to the leasing provider. If you don't do it, they will charge you for it. (Vans with a 2 year service schedule still require and interim annual oil change - unless this has changed very recently.)

You would also need to find out what the leasing company will allow as far as the securing of a tank in the back. Personally, I would remove the floor plylining and store it away. At the end of the contract I would remove all my stuff, fill the securing holes with solid rubber crommets and put the plylining floor back. I would also protect the exposed floor with Protectakot, especially as this would be a small expense to make the floor non slip.
Success is 1% inspiration, 98% perspiration and 2% attention to detail!

The older I get, the better I was ;)

steve123

  • Posts: 267
Re: Which Contract for a new van
« Reply #9 on: May 23, 2013, 07:43:46 am »
Thank you Spruce,

That is exactly the kind of advice I was hoping for.

Although i have read various pages about it your explanation was easier to understand and very helpful.

Much Appreciated.