Van - lease or buy

[tracey.]

Hello
My son is a plumber, until March he was fully employed but now self employed sole trader. He needs to replace his van - the current one is a money pit, theres always something wrong with it. I am trying to find some independant advise on the pros and cons of leasing - the only inof i can get libnks to is from leasing companies who obviously point out the good side of leasing but theres bound to be some issues which arent so obvious and I'd like to hear from someone who has leased.

The downside to buying is as we have seen with the current vehicle, repair costs. This is also reinforced by a colleague who has a vehicle which from the day he got hold of it, always needs to go in the garage, last mot & repair bill £3k!

As far as I can ascertain, leasing involves paying a deposit, looks to be in the region of £2000 plus a monthly payment. We would be responsible for MOT and consumable such as tyres etc. But what repairs are covered by the leasing company? Mileage restrictions?

Any recommendations for lease companies?

Thanks

 

[Deboy]

Hi Tracey, Ive been in the leasing industry for over 20 years and can answer pretty much any question you may have.

you mention paying a depoist, this is not the case, it is called an initial payment and forms part of the total lease cost and is not refundable at the end, just something to be mindfull of as some people think its refundable at the end of the term.

Theres no real pros and cons to leasing a van as its all depends on individual circumstances, but the below could be viewed as pros and cons

Cons
You will never own the vehicle
x/s mileage charges if going over allowance
No flexibility in terminating contract if circumstance change
Damage recharges over and above fair wear and tear

Pros
Fixed monthly costs which helps projecting cashflow
New van with warranty
Can have a maintenance package attached for hassle free servicing (chargable)

If you want to ask me anything in particular then by all means fire away and I i will give you as much free and impartial advice as you want.


john

 

[Mark T Jones]

A good comprehensive response from @Deboy

Similarly, with many years in the finance industry under my bet, I'd agree that there is no 'best' option, you are essentially balancing certaqinty with some flexibility. A few other points:

- Your son's accoutant might have specific views on what will be best from a tax persective.

- As a start-up, he may find it hard to get a lease (or may be excluded from some deals)

- Many of the questions you ask are contract specific - you need to be sure what is/isn't included in the specific contract you are signing. Don't assume or rely on generic answers.

- I've heard a few nightmare stories about charges on hand-back. On the other hand, having leased a few vehicles myself, I've never actually encountered it.

 

[WaveJumper]

@Deboy may expand further on the chances of leasing with such little trading background as mentioned above this could be your biggest hurdle

 

[JEREMY HAWKE]

If he is a plumber I would not waste money on vans .
My advice would be to buy an old Berlingo or Pug Partner with a bullet proof engine and gearbox for 2 Grand . Its going to cost peanuts even with a big repair .

Modern van workshop bills are telephone numbers and the money boys and girls on here will always tell you to borrow or lease cause they love everybody else's money

 

[tracey.]

Thanks for your replies. We have looked further into this and the cost of leasing is much more than we anticipated. Probably best to consider part exchanging current van and purchase a more suitable vehicle.

 

[fantheflames]

Not an expert, but I am a van owner! I'd always go for buying over leasing, although there are some perks in leasing. I think more so if you're a bigger business.

There's a guy in Southampton, called Hampshire Vans. They offer virtual viewings and can set up delivery if you're further away. Solid used vans.

 

[Porky]

@tracey.
In the position you are in, i would advocate going with the opinion of @JEREMY HAWKE in post #5 just keep your overheads right down, its about your son making money in the business at the end of the day not driving around in a swanky new van.
If you are after something a bit more premium, look for something low milage, reliable on a small loan so you own it outright and its paid off quickly. Once its paid for it owes you nothing. That's what i would be doing anyhow.

 

[Chris Ashdown]

If he has no knowledge of cars or vans like many youngsters these days including my son who buys on impulse because it looks nice, pay the small price for a RAC or AA survey of a second hand van. I guess you only need a car size van not a worn out transit size
Go with Jeremy's suggestion, its good advice

 

[IanSuth]

And don't get a modern Transit - my brother is a tradesman and is a family friend, both had so many problems with their transits they got shot after spending a fortune (electrical/alternator/immobiliser related) and tell stories of many friends in the trades with similar issues.

@JEREMY HAWKE has had vans do more miles than any of us so I would say what he says comes with millions of miles of experience

 

[Swiss Vans]

There are a lot more ways to get into a van. Finance lease really is the most flexible and its a true old fashioned lease oppose to contract hire which has really hijacked the phrase. Where you just hand it back

Typically need 10% deposit for finance lease
And you can have it with or without a final payment
example + VAT
£3000 down 59 x £432 month with a £10,000 "balloon" (usually set based on CAP)
£3000 down 60 x £601 a month no final figure
You have to pay all the bills like servicing etc
But there is no damage penalty or mileage penalty
You can sell at any stage unlike contract hire
And you get to keep 95% of sales proceeds rather than just walking away often with a bill