So, your new business venture is almost ready to roll. Every penny accounted for, every box ticked, with the choice of company vehicle the only decision left to make.
We look at why leasing a van is a good option.
What is business van leasing and how does it work?
Business Contract Hire (BCP) is a popular means of vehicle acquisition, for business sizes. It is a viable, cost-effective method of keeping your fledgling enterprise on the move, during the crucial opening months of trading. Reliability will never have been more important. BCP covers all the expenses involved in running a commercial vehicle, including maintenance, repair, and servicing, in exchange for a fixed monthly payment. This security enables you to devote your energy and time into helping your business find its feet. At a time of sink or swim, van leasing is the trade equivalent of a life jacket.
BCP agreements span 1-5 years and incorporate a fixed mileage for the contract. These parameters are chosen to suit your exact needs and expected usage. However, it is vital to calculate this accurately, as you may be liable for penalties if the agreed annual mileage is exceeded. Once the parameters are agreed, a fixed monthly rental is determined; this remains the same throughout the life of the lease agreement. Not only is the financing tailored to your business requirements; the technical specifications appropriate for your needs can also be configured before purchase, putting you in pole position to roar into profit from your opening day. Ladies and gentlemen, you are good to go!
BCP benefits summary:
✯ Lower monthly repayments than a personal van loan.
✯ You can reclaim 50% of the VAT on the monthly rental cost.
✯ The rentals are tax-deductible, thus freeing up cash flow.
✯ Monthly rentals are fixed – giving you added security.
✯ You have zero responsibility for the disposal of the vehicle – at the end of the agreement, either hand the keys back or upgrade to a new van!
✯ A fully-inclusive vehicle maintenance programme that minimises the risk of unforeseen outlay that might otherwise keep you off the road.
✯ You are shielded from the depreciation in value of the vehicle – allowing equity to be used as a deposit on a new van.
✯ Offset your lease rental against corporation tax – no writing down of your asset
✯ No awkward confrontations with second-hand van purchasers!
• Do your research – understand the difference between business leasing, hire purchase and finance leasing.
• Your van will be the lifeblood of your business – choose function over style.
• Leasing may seem an expensive luxury, but it buys financial security and commercial stability during those crucial first months of your business.
• Your leasing application depends on the following criteria:
○ An unblemished credit record
○ UK residency
○ No CCJ or mortgage arrears
○ An opening balance sheet
○ A 3-year address history
○ Proof of positive trading
○ A director able to act as guarantor