The basics of van leasing explained
Where Do You Live?
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. Repayment periods vary, but a typical one could be 36 months up to a maximum of 60 months. All of your monthly payments are exempt for VAT, and you can reclaim your initial charge on the deposit. 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. Similar to the hire purchase agreement, your repayments are usually between 36 and 60 months in total. if you are in a position to reclaim your VAT on the deposit, it will only be possible on a quarterly basis. One useful aspect is that if the van is sold or part-exchanged at the end of the lease agreement, the customer is allowed to keep 96% of the value.
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. Sometimes it is known as an Operating Lease. Most features here are the same as above, including the value of the deposit and the ability to recover the VAT charges. However, you have more budgetary control with fixed costs providing you stay within agreed mileage.
Lease Purchase
Most of the details are the same as the finance lease agreement. Where cheap 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. 5% of the sale value then has to be sent by the customer to the finance company. You then have to right down 100% of the cost and keep the van at the end of the period.
Citroen van leasing Is just another of the many options that are available to choose from.
Leave a Reply