Monday, April 23, 2012

Finding The Best New Van

Your business needs a van (or maybe a couple of vans), and you have decided to purchase a brand new one. You should congratulate yourself so far; choosing a new rather than a used van for your business makes good commercial sense and improves the image of your company in the eyes of its customers, but you knew that anyway.

The next challenge is find the best new van.

There are a number of obvious boxes to tick; for instance the van will need to be able to do the job for which it is intended; it should be reliable and have a good reputation in the business; it should be easy and inexpensive to service; it should be economical to run; it should look good and be safe. Depending on the nature of your business there might be a good number of additional boxes to tick too.

But the most important box of all to tick is that it should increase your business’ profitability and growth.

If you purchase a new van outright, then you will be making a significant up-front investment. For instance, if you are buying a reasonably sized van then you might be looking at an initial outlay of around £20,000. However you might choose to finance it, for instance through a bank loan or capital reserves, you need to be sure that that money would not be better put to other uses which would be more beneficial to your overall business plan.

There are alternative van deals that do not involve you in an upfront payment. The most popular of these are van lease. Effectively leasing a van for your business is the same as purchasing one for cash in that you have the same total access to the vehicle as you would have if you bought it, but there are a number of benefits:

You only pay for the depreciation
You can return the van after the lease period without any penalties
The van does not appear on your balance sheet as an asset
You need to find relatively small monthly payments compared to those on a bank loan
The payments are charged as a business cost for tax purposes
The lease covers the cost of tax, maintenance, breakdown cover, tyres and insurance

Another advantage of financing your van through a lease is that, with the money you save, you could decide to get a much better van that you would be able to afford otherwise, and that really might be the best new van for your business.

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