Choosing which vehicle you want is often the easy part. Deciding on the best financing solution, on the other hand, is where the problems start to arise. For such a significant purchase, it’s important that you make the right choice. There are two primary options to you: buying the vehicle, either with cash or through a loan, or leasing it. Here are the pros and cons of both approaches.
Pros and Cons of Buying
The main benefit of buying a van is that you’ll own the vehicle outright. This means you won’t have to worry about any restriction relating to the annual mileage you’re allowed to drive, any customizations you want to make, or how you promote your business through ads and decals. This also means you’ll be able to sell the vehicle at any time, which could come in handy if your business is going through tough times and you need immediate cash.
However, you should be aware that upon selling the vehicle it will likely have lost a significant amount of its original value compared to when you first bought it. According to the AA, some vehicles could lose as much as 40% of their original value within one year. You’ll also be responsible for any upkeep necessary. For those that cover a lot of miles, the cost of repairs could add up quickly.
Pros and Cons of Leasing
When leasing a vehicle, you’ll be able to pay on a monthly basis, typically over two-to-four years depending on your contract. This makes budgeting much more affordable. At the end of your contract, you’ll have the opportunity to choose a new, more modern vehicle and any maintenance and depreciation costs will be left to the lender to worry about. With many lease packages, such as those found here, maintenance and breakdown cover can be included in the monthly fees.
The downside to leasing is that you don’t own the vehicle at any point, unless you decide to go with a business contract purchase. You’ll also have to be aware of any hidden fees that could occur, such as penalty fees for each mile you drive over your annual mileage limit as well as understanding the ins and outs of the lender’s fair wear and tear criteria.
Many businesses opt for leasing as it provides them with more options compared to buying it outright. Ultimately, what you decide will be dependent on your business’s unique situation.