There are many different ways to pay for a van but the common question you'll be asking yourself is should I hire or lease or buy the van outright?
The answer to that question will depend on two things, your circumstances and how much money want to spend.
There will of course be other things to consider too, such as how long you plan to use van for. The business you are in might also impact the decision. That's because if you lease a van and you know its likely to get damaged - say from being on a building site - then you'll be paying through the nose to repair that damage at the end of the contract.
If you think your needs might change (ie. you'll need a large van (or a smaller van) at some point for a job then buying one outright isn't the correct decision.
Take a look at the options you have in our advice guide to buying, renting and leasing vans.
This is the easy part. If you buy a van you own it. Of course these days it's not that simple because it's not often that someone buys a van outright for cash. We'll do another advice article on financing vans and the finance products available.
For now lets look at the pros and cons of buying a van.
Buying a vehicle outright with your own money is usually the cheapest way of running a van. However, there are sometimes some incentives with finance deals that could make the cost comparable or even cheaper, but these are the exception rather than the rule.
But, we realise that not everyone can afford to buy a van for a great big lump of cash. That means you'll probably still need to arrange finance. Even with a finance deal, it is usually the best and cheapest purchasing method for most van drivers.
The reason for this is that you'll own the van for its entire life. Its yours to keep, use and sell.
Another benefit with a "cash" purchase is that you can negotiate the price to get a better deal. When it comes to buying a new van you a already own a van to trade-in.
If you own the van yourself, there won't be any restrictions on mileage or where you can drive it - for example taking it overseas. There are also fewer tax implications - which is always nice.
The negatives are that you have to pay for maintenance, tax and insurance yourself. You should do your very best to keep on top of them so that your van remains in the best condition. It's your van after all, and like if you don't brush your teeth you're going to have problems later on.
Another benefit of owning the van is that if you damage it you can choose how you repair it. You can shop around for the best price, do the work yourself or just leave it and save yourself the money.
Ultimately, it's your van and you decide what happens to it. You own the asset for its lifetime. You can potentially make great savings on not having to pay interest on any loans.
The only other thing to consider is depreciation. Your van will be losing value month to month. Keep an eye on the used market and you might be able to off-load it at a time that could be beneficial.
Leasing a van is a fixed weekly or monthly cost. For this reason, businesses really like to lease their vans.
If you lease a van, you will be tied in to a fixed term contract. This is pretty similar to the way you probably pay for your mobile phone every month. The only difference is that rather than 12 or 24 months, the lease on your van will probalby be for three to five years.
There's also a big difference in that unlike most phone contracts you won’t own the van at the end of the agreement.
If you've fallen head over heels in love with your van, and there's a chance you might, you may want to buy it after the contract ends. Some agreements allow this (lease purchase) but be warned, they will make you pay a substantial amount as a balloon payment.
There are actually a huge amount of different lease options. It's a really complicated finance method but in a nutshell, you don’t own the van so most arrangements come with fixed maintenance and breakdown packages. That doesn't mean you can treat it badly though. You're still responsible for it. Think of it like an airport hire car. You're going to get one hell of a shock if you hand it back in with some big dents or scratches.
If you choose an all-in service from the leasing provider, you will be paying the same every month. This is great for budgeting.
The benefits of having a lease van is that it will save you money on maintenance costs. The new van will be in warranty, and most providers will ensure it is fully covered by the arrangement - after all, they own it and want to see the vehicle come back in one piece so that they can either hire it out again or sell it on.
When the contract finishes it's dead easy. You just return the van and can get a new one. This way you any surprise repair bills when the warranty runs out.
One thing to be aware of is that you need to service the van on time and to the manufacturer’s recommendations. Because of all the tracking and telematics in vans, many decent leasing companies will be able to see when the van needs a service and will probably contact you about it.
There is a downside to leases. They tend to have mileage restrictions. If your work requires you to travel around a lot they might not be for you. The limitations can be quite severe. If you're doing even 40 miles per day, that's 200 per week or 800 per month and 9,600 per year. Therefore an 8000 mile per year mileage cap won't cut it. Fortunately, those sorts of numbers are usually reserved for cars. Commercial vehicle lease agreements are usually a bit more generous.
Make sure you are aware of any penalty clauses. These could be in relation to returning the van before the contract ends, any repairs for damage, mileage limits or even speeding tickets.
When it comes to damange, you might have to go through an approved supplier. This can add to the cost. There could also be admin fees for arranging repairs from the leasing company's side.
Penalty charges on excessive mileage can also be really costly, amounting to several pence per mile.
Our advice is to read the terms and conditions carefully. Don't get lured in by a too good to be true, attractive headline figure. Check the small print.
If you need to terminate the contract early there will be high penalty clauses. These may reduce over time. For example if you are in your third year of a five year deal, and if you are looking to renew the agreement with a new vehicle from the same supplier. Leasing companies can be very generous if you are looking to become a repeat customer. So keep that in mind if you are approaching your mileage limit and want a new van.
One finaly thing to remember is that while your new van won't need an MoT for a few years, you will have to tax it and most arrangements don’t include insurance. Some providers will offer insurance, which isn't compulsory, but it can be one less headache of van ownership to consider.
There are so many options when it comes to hiring a van. Rentals can be from a single day rental to months or even years.
The main thing to consider though is that although hiring a van is very similar to leasing one, you will have no rights to buy it at the end and you don't own it during the rental period either.
In many ways you take less responsibility for the vehicle because everything from insurance, servicing and even damage repairs will be taken care of. But, you are also have to be more responsible because of this. It's back to the airport car hire scenario again. The company may look for any excuse to send you a bill.
The positives are that you pay a fixed price for simply driving away with the van. The only thing you need to think about is the fuel bill.
Because of this, the costs involved are higher than a lease.
Short term rental can be done by the day or the week, which is expensive. If you are looking for something more long term they might give you a discount, or you should consider leasing.
The good thing is though, that because they are very short rentals, the return clauses are short too. So you can hand the van back and stop paying if a job falls through.
As with everything in life, the choice comes down to money. But the length of time you need a van is also important.
You should also factor in what level of involvement you want to have. If you want to do your own maintenance, or you have a friendly garage you trust to do the work then owning your own van could save your thousands. But leases are straightforward, provide a fixed cost and have many benefits thrown in.
If, like most van owners, you want to keep a van for a long time and run it in to the ground then buying is the far better value option.