Newbie sole trader...lease or contract hire ?

[Hawley Heating]

I have been on the phone to several companies re leasing a van but I still dont know whether to lease or contract hire as I dont know what the darned difference is still!! Which is best?

 

[businessfunding]

Contract hire is a form of lease - it is an operating lease. In itself the operator can take varying levels of responsibility raging from guaranteeing the residual (future ) value to fully maintaining the vehicle.

the other form of lease you might have been offered is a finance lease, where the lessor merely advances the money without taking any responsibility for the maintenance or value of the vehicle itslf (a little over simplified, but hopefully you get my drift)

The key question in all these things is 'what are you trying to achieve?'.

 

[Peanut Butter Man]

Do you really need to get a lease vehicle. Plenty of choice reliable choice out there for not a huge outlay if you buy

 

[Lease4Less]

Have a read through these 2 links:

http://lease4less.org.uk/contract-hire.html

http://lease4less.org.uk/finance-lease.html

As others have mentioned though, you are a new venture, so be sure you can afford to commit to a monthly payment for a long term period before you go any further with your enquiries.

 

[mckellar]

my company has 3 vans

1 on contract hire (full maintenance package) 1 bought outright and 1 on finance to purchase.

when i first set up i wanted a reasonably new van with a decent monthly cost (VAT upfront as deposit and now only £145 pcm) which was good as 145 pounds isnt a lot for what was only an 8 month old van.

the 2nd vehicle we got for a steal at £4000+VAT instead of RRP of £5800 (the reason being it had just come in to the dealership i got van number 1 from and he let it go for the price he paid to get a quick stock shifter) so i bought it outright as the finance was high and the "final payments" and admin fees were adding around £750 to the price.

3rd vehicle i havent had long, bought new, deposit down and on maintenance (does around 25,000 a year so thought it was best as it is taxed, serviced and any new tyres replaced)

so i have experience of 3 versions of purchasing vans. Really, it just comes down to what you prefer? buying older, leasing newer or getting a van fully maintained (but at a cost)

for a start up i would advise on buying a cheaper van, at least then you will have an asset to place against a brand new van when the time comes

 

[Hawley Heating]

Thanks...
In answer to your question...I dont know what we want really hence the question. Is the money spent a tax deductable expense? That would be the clincher I suppose

 

[mckellar]

All van expenses are tax deductible.

 

[Scalloway]

You can claim the whole cost of the van against taxable profit in the year of purchase or take an 18% writing down allowance each year. Interest paid on finance is also tax deductible.

Contract hire payments are tax deductible.

 

[Hawley Heating]

Thanks so much

My options have now been limited though by the fact that apparently with new ventures you need to have been self employed for 2 years min to get a vehicle on contract hire with most companies....is this right?

 

[Lease4Less]

If you are a Limited company then getting finance will prove difficult for new start ventures, but if you are a Sole Trader then I can think of a number of finance companies that would look at your application.

You will need to have a good personal credit rating as the finance will be underwritten on you, but assuming you have then you should be able to get approved.

 

[Hawley Heating]

Thanks Rob ... have you got a direct email- maybe you could help...credit rating is tickety boo

 

[Lease4Less]

Just sent you a PM