Need a New Van for Your Essex Business? Should You Buy or Lease?

If your business in Essex needs a new van, one of the biggest decisions is whether to buy it outright or lease it.

For many small businesses, buying has traditionally been the obvious choice. You own the vehicle, there are no monthly lease payments and, once the finance is paid off, the van is yours.

But that does not necessarily make buying the cheapest or most practical option.

With the price of new vans remaining significant and businesses facing pressure on cash flow, leasing can be an attractive alternative – particularly if you want to keep your money in the business rather than tied up in a vehicle.

Buying a van: what are the advantages?

The main advantage of buying is ownership.

Once you have paid for the van, it belongs to your business and you can keep it for as long as you want. You also have complete control over when you sell it or replace it.

However, there are some potential disadvantages.

A new van can represent a substantial investment. If you are a small business in Essex, that money could potentially be used for stock, equipment, employees, marketing or other areas of the business.

There is also depreciation to consider. New vehicles lose value over time, and your business takes the risk of what the van will be worth when you eventually sell it.

What about leasing?

With business leasing, you pay an agreed monthly rental for the vehicle over a fixed period.

Depending on the agreement, you may be able to include servicing, maintenance and other costs, making your monthly motoring expenditure easier to budget.

At the end of the lease, you normally return the vehicle rather than having to sell it yourself.

This can be particularly attractive to businesses that want to change vehicles regularly and avoid the hassle and uncertainty associated with selling an older van.

It can also make budgeting easier because you know broadly what your vehicle is going to cost each month.

Which is better for an Essex small business?

There isn't a single answer.

If you have plenty of cash available, expect to keep the van for many years and want to own the vehicle, buying may make sense.

If preserving cash flow is important, or you want predictable monthly costs and a newer vehicle every few years, leasing may be more suitable.

There are also tax and accounting considerations, which can vary depending on your business structure and the type of vehicle you choose. It is therefore worth taking professional advice before making a decision.

Don't just compare the monthly payment

This is where many businesses can make a mistake.

A cheap-looking lease isn't necessarily the best deal, while buying isn't automatically cheaper simply because you eventually own the vehicle.

You should compare the total cost of running the vehicle, including:

• Initial deposit or capital outlay
• Monthly finance or lease payments
• Insurance
• Servicing and maintenance
• Road tax
• Fuel or electricity
• Vehicle depreciation
• Potential resale value
• Downtime and replacement vehicle costs

You should also consider how many miles your business is likely to cover.

A builder travelling around Essex and into London every day may have very different requirements from a local electrician covering a relatively small area.