How To Lease A Van
Van leasing is a great way to get hold of a brand-new camper, commercial vehicle or pickup for affordable monthly payments.
Many businesses which use vans are choosing to lease entire fleets because of good BIK (Benefit-in-Kind) tax rates on low-emission models and the predictability of the fixed rental costs. So, whether you’re a self-employed tradesman or a business owner looking to oversee an efficient workforce with new company vans, read on to find out how it all works.
How does van leasing work?
To lease a van is just as easy as if you were to choose a regular car. There are plenty of manufacturers and models to choose from, which you can either get from an individual provider online, leasing comparison site or dealership.
Once you’ve identified what you want and where you’ll get it from, you’ll then need to decide how long you want it for, what you want to pay upfront and an annual mileage cap.
It sounds like a lot to remember, but the process can be broken down into five simple steps.
1. Choose your van
There are four main types of vans you can lease: small, medium, large and pickups. The latter are the only standout category here, mostly because they use the chassis of a car, but tend to have higher ground clearance and the ability to go off road.
On the other hand, not much separates the other three options, other than simply the size and how many people they carry. For example, a small van like the Ford Transit is famous for its competent courier abilities – with just two seats up front and a clear load space in the back for goods. Often the compact dimensions of these vehicles make them easier to manoeuvre than some cars, while only needing smaller, more fuel-efficient engines to power them.
For a bit more loading space and seats for a workforce or family, medium and large vans such as the Vauxhall Vivaro maximise your carrying potential.
If you’re not entirely sure what you’re looking for, you can always search for your ideal new van using your monthly budget.
2. Specify your agreement terms
After you’ve found a van which does what you need it to, you’ll need to decide how long you want it for, an initial payment and annual mileage cap.
Most leasing providers will allow you to have the vehicle from 2-4 years and drive 8,000-30,000 miles each year.
The initial payment (also known as ‘initial rental’) works against the monthly rental price, so the more money you put down, the less the monthly rentals will be for the remainder of the agreement. Typically you can choose between one, three, six or nine months’ for the initial rental, which will be calculated as a multiple of the lease price. For example, a three-month initial payment for a vehicle priced at £180 per month will mean you have to pay £540 before the agreement begins.
Likewise, your choice of annual mileage works in the same way. The more miles you wish to drive each year will make lease payments higher, as there’s greater chance of there being wear and tear on the vehicle the more it’s driven. This is also because the depreciation value will be higher the more you drive the vehicle.
Contract length, also known as ‘lease term’, will also impact how much you pay over the course of your van lease. Because leasing payments cover depreciation of the vehicle, it’s less each month for a longer deal, as the cost is spread over a longer period.
3. Decide between personal or business
Both types of deal are subject to a quick credit check by the finance provider funding the vehicle. As such, you will be asked to share a few details with them about income and expenditure in order to prove you can make the monthly payments.
Remember: Credit check approval can be difficult if your company doesn’t have at least three months’ worth of bank statements or audited accounts, so be prepared to show proof of this to the finance provider.
The difference between the two is that personal deals will be advertised with VAT included, whereas business won’t. This is because you can claim up to 50% of VAT on the monthly payments, and 100% on any maintenance package you may add.
In order to qualify for a business lease, you’ll need to be:
- In a partnership
- A Limited Liability Partnership (LLP)
- A Limited Company
- A VAT registered business
- An Embassy
- A charity
- A local authority (social services, health services, education etc.)
- A sole trader
- A Public Limited Company (PLC)
4. Arrange insurance and delivery
Most providers will offer mainland UK delivery as part of each deal. Once the other details are sorted, you will be asked to choose a suitable day, time and location for your new van to be dropped off.
It’s important to make sure that you’re in when the vehicle is delivered, as only the person whose name is on the finance form will be able to sign for it.
Once a delivery date has been arranged, you can then sort out insurance for your new van. Make sure you specify the policy start date as the same day that delivery happens, this way you will be able to drive it the minute it gets to you.
Road tax should be included within the monthly payments, at least for the first 12 months. Some providers will offer it for the entire duration of your term, regardless of how long that may be. However, be sure to check this with your provider to avoid driving untaxed, which will result in a DVLA (Driver and Vehicle Licensing Agency) fine of £80, which can increase significantly if the case is taken to court.
5. Keep the van in good condition
A van which is leased is owned by the finance provider, meaning that throughout your agreement you’ll need to arrange repairs for any damage which isn’t a mechanical or electrical fault.
Each provider will use the BVRLA’s (British Vehicle Rental and Leasing Association) Fair Wear and Tear Guide as a standard with which to judge its condition on collection day. The guidelines state that the car doesn’t need to be in ‘showroom condition’ and that signs of wear and tear from normal use are expected. However, we recommend checking your van 10-12 weeks before it’s collected to avoid extra charges for extensive damage.
You can find out what to expect when returning your leased van here.
If you plan on doing a lot of miles in your new van, or intend to have it on a long-term contract, you may want to consider a maintenance package. Although damage caused by driver error won’t be covered, it can guarantee that common wear and tear items (e.g. brakes, tyres, gearbox etc.) are serviced regularly.
Ready to hit the road in your new van? Then why not compare prices on lease deals for the UK’s most cherished vans?
For more information on leasing, and to find answers for all your FAQs, check out our other guides here.