How does van lease hire work?
Are you looking to hire a van for your business? Find out if van lease hire is the right option for you.
Where would we be without vans? Without them, our daily lives would be unrecognisable. They're a key part of the economy, transporting goods from A to B – day in, day out.
They're not just the lifeblood of the global economy. They also open doors for small- to medium-sized businesses, literally expanding their geographical market reach.
But if you're Googling "van lease hire", you probably already know this. Chances are, you're sold on the benefits of getting a van but are unsure of the best way to go about it.
That's why we've put together this handy guide to van lease hire (also known as "contract hire" or simply "leasing"). This is a type of rental agreement that gives your business use of the vehicle for a set period – typically two to five years. At the end of the lease, you hand it back. Simple.
Simple – or not so simple? After all, van lease hire is one of several types of hire agreements. What's more, it's not immediately obvious whether long-term van rental is more cost-effective than shelling out for a new vehicle.
So, without further ado, let's get to grips with van lease hire: how it works, who it works for and how it can help your business.
How van lease hire works
Van lease hire is a straightforward process. You choose a vehicle and agree to a fixed-term lease period. This will typically last between two and five years.
You make an initial deposit or downpayment at the start of the contract. You then make regular monthly payments throughout the lease period. These payments cover the cost of using the van – and, in some cases, road tax, insurance and service charges.
It's crucial to realise that you don't own the van. The rental company is the van's registered keeper. You're borrowing it for a fixed period. In this respect, van lease hire is similar to renting a flat or house.
At the end of the lease period, you don't have to deal with resale and are unaffected by any depreciation in value. All of this is handled by the rental company.
You could return the van, lease another vehicle or, in some finance schemes, purchase it outright.
That's the how – but what about the why? What are the main advantages of van lease hire for small- to medium-sized businesses?
The advantages of van lease hire for SMEs
Easy answer. There are two main advantages of van lease hire for SMEs:
- First, they give you more choice.
- Secondly, they can be more cost-effective.
Why go for a van lease rather than buying a used van?
It's a question we hear often. Why lock yourself into contract hire when you could buy a used vehicle?
Well, the first and most obvious answer to this is that van lease hire is cheaper. But there's another key reason why rental is an attractive option for many businesses.
Van rental is like a holiday. By hiring, you get to drive a vehicle above your pay grade for a set period.
Buy a used van, and you could well find yourself lumbered with high mileage, low performance and old tech. What's more, you'll have to pay for insurance and breakdown cover.
Van lease hire, by contrast, gets you the best for less – a blessing in the early days of a business when every penny counts.
Who can lease a van?
Most rental companies require drivers to have had a full UK driving licence for at least a year. They also tend to have a minimum age requirement – usually somewhere between 18 and 24.
Perhaps most importantly, each rental company will have financial eligibility criteria. The company will look at your income, debts and credit score to decide whether you're a safe pair of hands.
This is a key consideration in the early days of a business. If you don't have a track record of successfully paying off debts, you may have to take extra steps to secure your lease. It's all because lenders want reassurance that you're not a financial risk.
Can a new business lease a van?
The early days of any business can be challenging. One reason for this is that many lenders are unwilling to take risks. This is especially common when dealing with new limited companies.
This is because a new limited company is a new legal entity with no paper trail proving its track record in paying back loans.
It's easier for sole traders. Because you're operating as an individual, lenders can look at your back pages and decide whether you're trustworthy or not.
This doesn't mean it's impossible for a new limited company to lease a van, however. It may be that you have to make a slightly higher downpayment to show your creditworthiness. Alternatively, you may have to provide a guarantor (a person who will cover the payment if you can't).
What's the difference between a lease hire and a finance lease?
When you take out a van lease, the rental company ("lessor") owns the vehicle. This means they shoulder the risk of depreciation and resale at the end of the lease.
With a finance lease, these risks are shouldered by the customer ("lessee"). In this case, they can sell the vehicle at the end of the lease.
What's included in van lease hire?
Different rental companies will include different things in a lease hire agreement. Some will offer road tax and MOT. At MVH Rental, we offer flexible hire options, servicing and breakdown cover and a free replacement vehicle with every van leased.
Are you looking to
lease a van for business in the northeast of England? Call MVH Rental today on (0191) 4888 700 for a quick, competitive quote.
