Buying a van

Discussion in 'Accounts & Finance' started by Cranbrook, Aug 19, 2019.

  1. Cranbrook

    Cranbrook UKBF Newcomer Free Member

    7 0
    Evening all..

    Im currently looking to get a van for my construction company but have no idea which route to go down. I have the cash available to buy one, im looking to spend around £10,000, but do not know whether I should take a loan, lease, contract purchase or just use my own money... Any advice more than welcome!
     
    Posted: Aug 19, 2019 By: Cranbrook Member since: May 12, 2019
    #1
  2. Mr D

    Mr D UKBF Legend Free Member

    17,374 1,957
    Besides the van what do you want out of the deal?

    Can you use some of that cash to generate enough extra money to cover payments on a lease / loan / contract?

    Do you want no ongoing payments?

    Do you want ongoing payments and perhaps younger or bigger vehicle?
     
    Posted: Aug 19, 2019 By: Mr D Member since: Feb 12, 2017
    #2
  3. billybob99

    billybob99 UKBF Regular Free Member

    1,237 287
    Cash is king.
     
    Posted: Aug 19, 2019 By: billybob99 Member since: Apr 23, 2013
    #3
  4. Cranbrook

    Cranbrook UKBF Newcomer Free Member

    7 0
    I guess what I'm trying to ask is, if I use my money to buy a van outright, can I claim it back on my tax?
     
    Posted: Aug 19, 2019 By: Cranbrook Member since: May 12, 2019
    #4
  5. Cranbrook

    Cranbrook UKBF Newcomer Free Member

    7 0
    Yes I could use the cash elsewhere and I would be okay to cover payments... Is that a good option?
     
    Posted: Aug 20, 2019 By: Cranbrook Member since: May 12, 2019
    #5
  6. Darren_Ssc

    Darren_Ssc UKBF Regular Free Member

    467 97
    I just bought a runaround for £5,000. Got a tesco loan at 3.5% and kept the cash in my vanguard isa which is currently earning multiple times this amount.

    The risk is that the current rate of return isn't maintained or goes south but since the total interest on the loan is negligible anyway it is worth it.
     
    Posted: Aug 20, 2019 By: Darren_Ssc Member since: Mar 1, 2019
    #6
  7. Scalloway

    Scalloway UKBF Legend Free Member

    15,321 3,237
    You can set the whole cost againt profits as Annual Investment Allowance (AIA) in the year of purchase. You can also claim AIA if you borrow money to buy the van, plus claim the interest on the loans.

    Claiming capital allowances

    https://www.gov.uk/capital-allowances
     
    Posted: Aug 20, 2019 By: Scalloway Member since: Jun 6, 2010
    #7
  8. Mr D

    Mr D UKBF Legend Free Member

    17,374 1,957
    It could be.

    If it was me I'd get a van on finance (so at the end of it own an old van) and use the cash to expand the business. But my business may be very different than your business and I know the return I will get overall vastly exceeds interest.
     
    Posted: Aug 20, 2019 By: Mr D Member since: Feb 12, 2017
    #8
  9. Gordon - Commercial Finance

    Gordon - Commercial Finance UKBF Ace Free Member

    1,626 453
    I wouldn't recommend spending the cash, especially as you mentioned it could be put to good use elsewhere.
    Of course, I would say that getting a van on finance is the way to go...if I didn't think that I would be in the wrong job. However I would add to that in support of what @Mr D mentions above, do it in such a way that you actually own the thing at the end. Leasing is probably not the right method for what you describe, and things like contract hire are a trap set by motor dealers to force you into coming back to them at the end of the term.
    HP would be what I would recommend, and as @Scalloway mentions you can still get the AIA, and relief from interest.
     
    Posted: Aug 20, 2019 By: Gordon - Commercial Finance Member since: Jun 26, 2017
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  10. Cranbrook

    Cranbrook UKBF Newcomer Free Member

    7 0
    Thanks for your help everyone

    Im a bathroom installer and this is my first real year of trading... Realistically I would rather use the cash for my own personal renovation... but i've always been the type of person who buys vehicles with money i've saved, however it seems that may not be the best solution for me now
     
    Posted: Aug 20, 2019 By: Cranbrook Member since: May 12, 2019
    #10
  11. MBE2017

    MBE2017 UKBF Ace Free Member

    1,093 290
    The other way you could go OP is to rent the vehicle. Whilst it could be more costly, there can be huge advantages as well, such as changing the vehicle according to your requirements etc, walking away if you decide to change direction etc.

    I always rented a van for a month or two before buying, it helps to find out what works and doesn’t work over a longer term test, rather than just a few hours of use.
     
    Posted: Aug 20, 2019 By: MBE2017 Member since: Feb 16, 2017
    #11
  12. Cranbrook

    Cranbrook UKBF Newcomer Free Member

    7 0
    As in renting from someone like enterprise?
     
    Posted: Aug 20, 2019 By: Cranbrook Member since: May 12, 2019
    #12
  13. DavidWH

    DavidWH UKBF Enthusiast Free Member

    1,467 270
    Going through the same thing at the moment.

    Leased a van, due for renewal and trying to steer us into a 4yr deal, an additional £50 a month.

    Current stance is sod it, just buy an older half decent van for what we use it for.
     
    Posted: Aug 20, 2019 By: DavidWH Member since: Feb 15, 2011
    #13
  14. The Byre

    The Byre UKBF Ace Free Member

    9,056 3,554
    Rules for buying a van -
    • Never ever use dealer credit. If you MUST use credit, get it from the bank.
    • Always knock 10% off - that's the minimum. Try for 15%, but anything less than 10%, walk away, but leave your card, saying "Just in case you change your mind!"
    • Blame someone who isn't there. "Look! £10k is all I've been given by my boss (or wife, father, uncle, the dog). He said go and get a bloody Transit for 10k, so that's all I've got!"
    • Get a Transit. Every 'Stig-with-a-Spanner' knows how to fix a Transit.
     
    Posted: Aug 20, 2019 By: The Byre Member since: Aug 13, 2013
    #14
  15. MBE2017

    MBE2017 UKBF Ace Free Member

    1,093 290
    Yes, Northgate were my preferred company, but I needed a national company who were happy to swap vehicles whenever I wanted, so a transit one day, Luton box van the next etc.

    Bear in mind their is plenty of good deals and offers on so look around, ask what they can do for you etc.
     
    Posted: Aug 20, 2019 By: MBE2017 Member since: Feb 16, 2017
    #15
  16. ruby123

    ruby123 UKBF Contributor Free Member

    32 0
    Just looking at similar, question is as I’m a start up do I apply for the finance in my personal name and pay through the ltd company? Not sure credit will go through in company name as it’s new and can get great apr rate in my name. Know I’d be personally liable but sure if in company name they would want a pg anyway.
    Assume I can claim against tax this way?
     
    Posted: Aug 21, 2019 By: ruby123 Member since: Oct 30, 2018
    #16
  17. Scalloway

    Scalloway UKBF Legend Free Member

    15,321 3,237
    If the agreement is in your own name rather than the company's then the company can't pay for it. You could charge the company 45p per mile for use of the van.
     
    Posted: Aug 21, 2019 By: Scalloway Member since: Jun 6, 2010
    #17
  18. Gordon - Commercial Finance

    Gordon - Commercial Finance UKBF Ace Free Member

    1,626 453
    Yeah you would just need to be careful about using a personal van for business use. Tax, insurance, mileage, all becomes a bit complicated as @Scalloway says.
    Equally, if you buy it through the company, you need to be careful about any personal use.

    It is possible to get finance as a new limited company, but as you say you would be expected to give a DPG. Don't assume either that a new co will be charged excessive rates. I've just done a deal for someone who was a brand new company but his personal credit was strong, so he got tier 1 rates.
     
    Posted: Aug 21, 2019 By: Gordon - Commercial Finance Member since: Jun 26, 2017
    #18
  19. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    10,765 2,172
    Why a new van would be my first question, if for show then 2 or 3 year old vans which have been looked after all look the same as new ones to your customers

    Presumably local customers so not long journeys

    A couple of quite months and you will appreciate the spare money siting in your account, that rainy day often comes with new companies
     
    Posted: Aug 21, 2019 By: Chris Ashdown Member since: Dec 7, 2003
    #19
  20. ruby123

    ruby123 UKBF Contributor Free Member

    32 0
    Cheers
    Cheers Gordon,
    What sort of rates are we talking? I have A1 personal credit but it’s a new start business.
    What sort of deposit are we talking based on a £18,000 plus vat van? Can I use this type of finance to buy privately or does it need to be a dealer? Thanks
     
    Posted: Aug 21, 2019 By: ruby123 Member since: Oct 30, 2018
    #20