Everything you need to know about financing your new van
Finance Lease
This can really benefit small businesses as the initial deposit can be as low as one month’s rental and you can have a balloon at the end reducing your monthly payments. You don’t need all the VAT to start with, so helping your cash flow.
Even if you become Vat registered later in the contract you can then start claiming the VAT back
The benefits of Van Finance Lease:
• You can reclaim the VAT on rentals (if vat registered)
• 100% tax deductible.
• Lower starting deposit
• Fixed payments for the whole agreement.
• Option to have a final balloon payment, reducing the monthly costs
• Low deposits and low monthly payments
• No penalty charges for additional mileage or damage at the end of the agreement.
Hire/Lease Purchase
The most popular method of business funding for smaller businesses.
VAT is reclaimable in one lump sum. No mileage or damage clauses. It is always possible to get a settlement figure to pay off the finance. You are buying the van, which means you can keep it as long as you want
The benefits of Lease Purchase:
• Fixed monthly cost
• Ownership at the end of the agreement
• Flexible contract
• Possible to include a Balloon Payment
• VAT only deposit
• Business capital not tied up in a depreciating asset
• No VAT on payments
• Interest reclaimable against tax
• Writing down allowance
Contract Hire
The most restrictive of the styles of finance available for businesses. Not necessarily the best for smaller businesses.
The lessee has to set out a mileage limit from day one. This cannot be altered once the contract has started. Any mileage over and above the contracted amount will be charged to the lessee. Once started the contract cannot be ended without making all the payments.
The van will be inspected on its return and any damage above normal wear and tear will be charged to the lessee. The van must be returned to the funder at the end of the contract leaving you without a van and possibly no deposit
Outright Purchase
Pay cash, the van is yours! However all your cash is now tied up in your van, so not so great for cash flow!
• Ideal for those who want total ownership of their vehicles
• No Contracts or agreements
• The vehicle is yours to do with as you please from day one
It is often easier to talk to someone than try and work it out for yourself!
So if you still aren’t sure what is best for you, please call me and I would be happy to help!
Tim Green
Managing Director