All you should know about van leasing
It can be quite a struggle for the ablest of minds to understand the various differences between leasing agreements. What are the best options for the customer? Would it be a wiser move entering into a straight rent agreement?
Hire purchase
When you take out a hire purchase agreement, you will be paying a deposit equivalent to 3 months of the overall rental in advance plus VAT. Payment periods can vary, but the usual period is between 36 and 60 months maximum. All monthly repayments are exempt of VAT and the charge on the deposit is reclaimable. Another favourable point is the offsetting of taxable profit which is a huge bonus to any small business. When the lease contract has finished, the van is yours and there are no more charges to pay.
Finance Lease
When you take out a finance lease agreement, you will be paying a deposit of 1 to 3 months of the overall rental in advance plus VAT. Your repayment period is usually between 36 and 60 months, which is the same as the hire purchase agreement. if you are in a position to reclaim your VAT on the deposit, it will only be possible on a quarterly basis. One appealing freature is if the van is sold or part-exchanged at the end of the term – 96% of the van value is retained by the lesse.
Contract Hire
Many aspects of this type of arrangement are the same as the finance lease, with the added bonus of a maintenance package. There is none of the hassle for the customer of having to sell the van when the lease term has finished. It is also known as an Operating lease within the business. Most features here are the same as above, including the value of the deposit and the ability to recover the VAT charges. However, providing you remain within the fixed mileage, you can retain more budgetary control by fixing your costs.
Lease Purchase
Most of the details are the same as the finance lease agreement. Where van leasing differs, is at the end – you sell the vehicle to a third party for a reasonable value and buy it back for £1. Forward an invoice to the finance company with a cheque for 5% of the sale. You keep the van at the end of the period having written down 100% of the total cost.
Volkswagen van leasing is just one of the options out there to choose from.