Buying a van

[Cranbrook]

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!

 

[Mr D]

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?

 

[billybob99]

Cash is king.

 

[Cranbrook]

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?

 

[Cranbrook]

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?

Yes I could use the cash elsewhere and I would be okay to cover payments... Is that a good option?

 

[Darren_Ssc]

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.

 

[Scalloway]

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?

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

 

[Mr D]

Yes I could use the cash elsewhere and I would be okay to cover payments... Is that a good option?

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.

 

[Gordon - Commercial Finance]

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.

 

[Cranbrook]

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

 

[MBE2017]

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.

 

[Cranbrook]

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.

As in renting from someone like enterprise?

 

[DavidWH]

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.

 

[The Byre]

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.

 

[MBE2017]

As in renting from someone like enterprise?

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.

 

[ruby123]

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?

 

[Scalloway]

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.

 

[Gordon - Commercial Finance]

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?

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.

 

[Chris Ashdown]

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

 

[ruby123]

Cheers

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.

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

 

[Gordon - Commercial Finance]

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

Not really allowed to talk about rates on the forum as that would be self-promoting, and also it depends on way too many other factors.
Deposit can be a little as just the VAT, maybe first payment up front, or as much deposit as you want. Up to you.
I do have the ability to fund privately purchased vans, but the conditions are very strict, and the seller needs to have an original invoice from when they bought the thing. Much, much easier to do it through a reputable dealer, and there's enough vans out there that you shouldn't struggle to find one.

 

[ruby123]

Not really allowed to talk about rates on the forum as that would be self-promoting, and also it depends on way too many other factors.
Deposit can be a little as just the VAT, maybe first payment up front, or as much deposit as you want. Up to you.
I do have the ability to fund privately purchased vans, but the conditions are very strict, and the seller needs to have an original invoice from when they bought the thing. Much, much easier to do it through a reputable dealer, and there's enough vans out there that you shouldn't struggle to find one.

Ok thanks, I understand, I may be in touch. Thanks

 

[Gordon - Commercial Finance]

Ok thanks, I understand, I may be in touch. Thanks

That's fine send me a PM if you want and we can exchange numbers/email addresses.

 

[ruby123]

That's fine send me a PM if you want and we can exchange numbers/email addresses.

Cheers, can you pm me your email it won’t let me as I don’t have enough posts

 

[Cranbrook]

If I take a loan to buy a van and my monthly repayment is lets say £200, can I clain all that back against tax until the loan is fully paid?

Apologies if this is a stupid question

 

[The Byre]

Start apologising!

P.S. Yes.

 

[Cranbrook]

Haha okay thanks!

Next stupid question... Im a sole trader but I have a company name, do I buy the van in my name or in the company name?

 

[The Byre]

Business 101 - you are a sole trader. Your name, but make sure it really is tax-deductable.

Talk to your accountant! That's what the Mother F is there for!

 

[Scalloway]

If I take a loan to buy a van and my monthly repayment is lets say £200, can I clain all that back against tax until the loan is fully paid?

No you can only claim the interest part.

 

[Chris Ashdown]

Big Big Big Difference

 

[DavidWH]

You'll not go far wrong speaking with @Gordon - Commercial Finance

Got a cracking deal from the dealers, and gordon's sorted us a cracking deal on the finance... the leasing company we leased the current van off was quite surprised when I told them we'd bought a new van