How to Finance Your Small Business Van
Small businesses need a van for deliveries and pick-ups. It is also an advertising board on wheels, but when money is tight how can you afford the outlay of financing a van? You have three options to get a van for your business: buying, leasing or a personal contract purchase.
Lease
The advantages of leasing a van are that you know your monthly costs and the length of the lease, which can be put into your business plan. Also, you don’t have to worry about depreciation, as you can return the van at the end of its lease and get another new van and start again. Some lease agreements also cover the cost of annual servicing. The downside of leasing is that you will generally pay more than the cost of a new van over the lease period. This is how lease companies make their money, but the amount paid would still be considerably less than if you bought the van with an unsecured loan.
PCP
A personal contract purchase is similar to leasing, but you will own the vehicle outright at the end. The monthly payments are smaller, but at the end of the agreement you will have a lump sum to pay to acquire ownership of the vehicle. If you don’t want this, you can simply hand it back and start the process again with a new van. This process is very similar to a hire purchase agreement, but with hire purchase you cannot hand the vehicle back.
Buying
If you have the cash to go out and buy a van, you will have peace of mind that the van belongs to you, and you have no monthly repayments. The downside is that not many small businesses will have a chunk of cash to splash out on a van, and you have the unpredictable costs of maintaining the van and keeping it in a good condition ready for the day you will want to sell to upgrade to a bigger van. A way of keeping your van in a good condition is by plylining – see www.vehicle-accessories.net for more information. This is a process of lining the van with plywood, which will strengthen the interior and protect it against dents and scratches.
Choose your option carefully, keeping in line with business goals and the available budget.