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Should you buy or lease a van?

Depending on your budget, buying a van might be a daunting prospect. If paying for it is a concern for you, leasing a van for business could be a viable alternative. 

But how does it work, and is it worth it? Let’s take a look.  

Van driver checking a form in their van


What’s the difference between buying and leasing a van for your business? 

Buying a van, either through paying upfront or with a van loan,  means you eventually own it. Leasing a van means you make a monthly payment to use the vehicle, and you never own it.

You pay a fixed amount for a certain period, usually 2 or 3 years, and when the agreement ends you hand back the van. You can also lease to buy a van which means at the end of the agreement you have the option of paying to buy and keep the van.


What are the advantages of a van lease? 

Leasing a van instead of buying has a number of benefits:

  • You can change your van every few years when your leasing agreement ends

  • Van tax is usually included

  • There’s no problem with depreciation

  • Some lease packages might come with extras, such as breakdown cover

  • Fixed monthly payments could make budgeting easier, especially for businesses

  • For business van lease, the VAT on the lease payments could be tax deductible

  • Maintenance might be included in the deal so you won’t be responsible for it

  • You don’t have to sell the van when you don’t want it anymore

  • Leasing might allow you to drive a newer van, which is likely to have lower running costs than an older model


What are the disadvantages of a van lease?

But just as with buying a van, there are also some negative aspects to consider: 

  • You don’t own the van so can’t sell it on to make some of your money back.

  • You have to return the van at the end of the lease.

  • If the van is damaged when you return it you might have to pay extra charges.

  • You need a good credit history to get a leasing agreement.

  • There’s a limit to how many miles you can drive the van each year. If you go over the mileage limit you might have to pay extra charges.

  • You’re not usually allowed to make any major van modifications.

  • There are monthly payments to make.


What are the advantages of buying a van?

Buying a van comes with a number of advantages:

  • You own the van. This means you can sell it when you don’t want it anymore and get some money back.

  • You’re in a better position to negotiate and haggle if you’re paying in cash.

  • No restrictions – you can use the van how you wish with no mileage restrictions if you buy it using cash or hire purchase.

  • You might be able to trade in your old van to shave off some extra cash.

  • There are no monthly payments if you pay for the van yourself.

  • You might be able to offset the cost against your tax bill.

  • You can maintain the van to whatever standard you like, so long as it passes its MOT


What are the disadvantages of buying a van?

But there are also some drawbacks:

  • It could be expensive and take a big chunk of money out of your business if you buy it outright

  • You might need to pay a deposit and make monthly payments if you use van finance to buy it

  • If you buy a brand new van it’s likely to depreciate in value immediately

  • You’re responsible for the cost of repairs, which is likely to increase the older the van gets

  • You have to sell your van or dispose of it yourself when you don’t want it anymore


Is it better to lease or buy a van? 

The overall cost of the van is one of the biggest considerations. Buying a van outright tends to be the cheaper option, especially if you can part-exchange your old one and haggle on price.

But having fixed payments on a lease agreement could help if you like to budget and keep on top of your finances. 

It also depends on how you plan to use the van. Lease agreements tend to come with restrictions like mileage limits or no modifications allowed.

If you’d prefer the freedom to do as you please with your van, buying one outright might be best if you can afford to. 

Find out which are the best vans to buy or what you need to know if you’re thinking about buying a second-hand van.

Or if you want to own a van but can’t afford to pay for it upfront, van finance could be worth considering. This could be with hire purchase, personal contract purchase, or a personal loan.

But if you‘d like the flexibility to drive a brand new van every 2 or 3 years, leasing could be the best option. It could also suit you if you don’t want the responsibility of owning one. 


Van lease with insurance 

Some van leasing agreements come with a built-in van insurance policy. You should look at the wording of the policy to check what you’re actually covered for though. 

If your agreement doesn’t come with insurance, it’s worth comparing van insurance policies. Check that any policy covers you for however long you plan to use the van.

If you’re concerned about the cost of van insurance, here are some tips to keep your van insurance costs down

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Will buying a van reduce my tax bill?

Yes, it could. If you buy a van for your business you could offset the cost against the amount you pay income tax on.

This is either as a capital allowance if you use traditional accounting, or using the simpler cash basis system.

These let you deduct all or some of the van’s value from your profits so you pay income tax on less.