While it’s not a one-size-fits-all answer, leasing a new van can often be cheaper than buying outright, particularly in terms of monthly outgoings. However, the overall cost will depend on factors such as the van’s residual value, the length of the lease, and your specific needs and circumstances.
Leasing vs Buying: A Comparison
Leasing a van means you pay a fixed monthly fee for a set period, usually between two to five years. This provides predictable costs and can often mean you’re able to afford a newer or higher-specification van than if you were buying outright. However, you won’t own the van at the end of the lease.
Buying a van outright means you pay the full price upfront, which can be a considerable expense. But you’ll own the van and can sell it in the future, potentially recouping some of your investment.
Other Factors to Consider
The overall cost of leasing versus buying can also be influenced by factors such as VAT and Vehicle Excise Duty (VED). If you’re VAT-registered, you can claim back 100% of the VAT on the lease payments. VED for vans is a flat rate of £345 per year, which applies irrespective of whether you lease or buy but is included in the lease monthly price.
Residual value, or how much the van is expected to be worth at the end of the lease, is another important factor. A higher residual value can result in lower monthly lease payments as the lease price is calculated based on financing the depreciation – the lease company will likely auction the van after you give it back.
Electric Vans: A Special Mention
If you’re considering an electric van, the UK government currently offers a plug-in van grant of up to £5,000 for larger vans and £2,500 for smaller vans under 2,500kg. This makes leasing an electric van a financially attractive option. Leasing also makes sense on electric vans given the resale values may be impacted significantly by advances in tech such as battery technology. If you buy outright, you are exposed to factors like this whereas when you lease, the leasing company is taking that risk.
Ultimately, the decision between leasing and buying outright depends on your financial situation, business needs, and preferences. Leasing can offer lower monthly costs and the opportunity to drive a new van every few years, while buying outright gives you complete ownership and flexibility.
