The basics of van leasing explained
Understanding the complexities of leasing agreements can be a taxing experience even for the most niblest of minds. 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. The periods of payment can vary between 36 and 60 months at the limit. Your monthly payments will be exempt from VAT and your initial deposit charge can be reclaimed. One other point in its favour is the ability to offset any taxable profit – which is a good boost for any small business. When the contract has ended, the van belongs to you with no further charges.
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. Repayments are generally between 36 and 60 months, like the hire purchase agreement. If you are able to claim back the VAT on the deposit, you will only be able to do this on a quarterly basis. One appealing freature is if the van is sold or part-exchanged at the end of the term – 96% of the van value is retained by the lesse.
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. So long as you stay within your agreed mileage, you can fix your costs and retain budgetary control of your agreement.
Lease Purchase
Most of the details are the same as the finance lease agreement. Where commercial vehicle leasing differs, is at the end – you sell the vehicle to a third party for a reasonable value and buy it back for £1. You then have to send a cheque to the finance company for 5% of the value of the sale. You then have to right down 100% of the cost and keep the van at the end of the period.
Iveco Van Leasing is just one of the options out there to choose from.
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