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Re: Contract Van hire – any thoughts?
I will ask the lease company and get back to you. I presume that there would be an extra charge to have it fitted.
Re: Contract Van hire – any thoughts?
Martin wrote:Just curious… But how do you go about racking out a leased van? Or do you lease the biggest one possible and then chuck all your van stock on the floor?
Leasing company supply it as ply lined (it saves them having the van returned with loads of dents in the panels) hence it is easy to rack out.
Re: Contract Van hire – any thoughts?
Buy it out right invest in your business. Vw transporter is good bet.
Re: Contract Van hire – any thoughts?
Every few years I ask my accountants the same question ,’rent’ (in all its many forms) or buy .The answer is invariably “if you want shiny new vans every 3 years or so then rent, but as you keep your vans much longer ,buy.”
Bear in mind our ‘new’ van is six, middle one is nine, and I drive one that’s sixteen 😳Re: Contract Van hire – any thoughts?
I have contract hired my vans from 2002. It makes sense as the van is ‘off the balance sheet’ so therefore does not affect your capital and any loans you may require in the future. Buying outright is going to lose you a quarter of the value in the first week of ownership; OK… you will own the van after the loan is paid off but why tie up your company’s assets in an item that depreciates so quickly? The residual value at the end of your credit payments is say a third of the new cost – but you have to sell that van to realise the capital back. Yes you get depreciation allowance on your tax but your credit payments don’t go down do they?
Contract hiring the van can be trouble free, but always get it ply lined as Mark says (saves damage to the panels)and keep it tidy and clean. Road fund licence is included for the term of the contract; not so with outright purchase. The van is warranted and MOT free as well for 3 years, so don’t bother with maintenance as wiper blades, brake pads and tyres are cheap enough. And you don’t have to use the main agent for servicing now either, so costs can be even lower. Most vans are 20,000 miles between services now anyway.
The usual gripe is “what about the damage charges?” at the end of the contract. But to be fair, if you were selling your outright owned van you would get the damage repaired to get the highest price, wouldn’t you? Or expect the hit to the amount you can sell it for. So there really is no difference in that respect.
Contract hire is basically hire and return at agreed mileages; lease purchase is lower monthly payments and a balloon payment at the end of contract to buy the van. (with the mileage and possible niggles of 3 years of motoring, why would you want that?) And the balloon payments are usually market value so you gain nothing. Unfortunately with this method you have to buy the van. PCP or personal contract purchase is more for your family car and it is really like rent to buy schemes on houses. You have to buy the van at the end of contract.I have a 3 week old Citroen Dispatch Enterprise spec long wheelbase van on contract hire with 20,000 miles per year, bluetooth, Sat nav, air con, ply lined, 3 years warranty and road tax paid, delivered to my door at £264 + VAT per month. So I just have to insure it and drive it. Contract hire is the easiest and most straightforward of the three types of leasing. And as it’s rental it is offset-able against your tax at the end of the year.
As for racking, the ply liner (and it’s mounting screws) give many locations to attach racks and shelves. The jig holes in the inside body frame can also be used with some ingenuity. I use the drywall sprung ‘plugs’ – (they are the metal type that you push through a plasterboard wall and they spring open) and have never needed to drill any holes in the van body to attach racks using this method. Hotpoint 95 series drum spider nut plates are also useful for this job as they spread the weight and avoid damage. I always put a piece of clear plastic sheet between the frame and the wall of the van before I tighten the bolts to prevent scratching and chafing; something that saves time when returning the van.
Look at Contract Hire and Leasing’s website and Nationwide Contract Hire as they explain everything you need to know. You can also compare deals side by side on Nationwide.
I got my last two vans (Mercedes Vito and the Citroen Dispatch) through Freedom Vehicle Contracts (0845)130 1870. Cheaper than any on the net including the main dealers with their ‘special rates’. Speak to Darren, he’ll be able to get you what you want at the price you want with the spec you want. Really good company and very helpful and above all, keep you informed of everything. Good guys.Hope that helps,
Steve.
Re: Contract Van hire – any thoughts?
Which works out at £3000 per year over the 3 year term, (after taking off the value of the included road tax).
Alternatively, buy a 3 year-old 60,000 mile ex-contract hire van for £6,000 and sell it after 3 years for £3,000. This works out at £1000 per year. OK, the van won’t be quite so shiny, and maintenance bills will be higher, but overall should work out far cheaper!
Re: Contract Van hire – any thoughts?
stratfordgirl wrote:Which works out at £3000 per year over the 3 year term, (after taking off the value of the included road tax).
Alternatively, buy a 3 year-old 60,000 mile ex-contract hire van for £6,000 and sell it after 3 years for £3,000. This works out at £1000 per year. OK, the van won’t be quite so shiny, and maintenance bills will be higher, but overall should work out far cheaper!
But if you are a sole trader and not VAT registered, you can offset the lot against your tax bill which you can’t with a capital purchase. So no, it’s not cheaper. I could pay the tax man at the end of the year and my £6000 van loan or claim the whole lot back from the taxman; I’d really rather do the latter. But if you are VAT registered, you won’t get the VAT back.
No MOT failures and full roadside recovery in the contract price; fixed predictable costs and a new turnkey vehicle every three years. Alternatively you can buy my old contract Mercedes van that I tore the nuts off for three years and inherit the problems I was starting to get if you want….
It helps to be married to an accountant….. 8)HTH,
Steve.
Re: Contract Van hire – any thoughts?
I’m not clued up on the VAT issue, but the tax rules on capital purchases can be a lot more favourable than they used to be. The Annual Investment Allowance (AIA) introduced in 2008 means the total cost of many capital purchases on plant and machinery (including vans) can be offset against profit in the year of purchase, as an alternative to the usual 20{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} per year writing down allowance. The AIA limit has gone up and down like a yo-yo since then, but for the current year is £500,000, up from £250,000 last year, before dropping back to the previous level £25,000 next year. All amply covering the purchase cost of a typical van, particularly if second-hand.
I don’t think the cost issue is clear cut, that’s why people favour different options. I think it comes down to personal preference, whether you are looking for known running costs and reliability, along with the attraction of a new van every 3 years, or whether you prefer to put money aside to buy outright, cover repair costs as they arise, and change your vehicle less often so as to minimise costs in the long term.
Re: Contract Van hire – any thoughts?
Buying new vehicles is an investment in your business, it projects the image that you care and that you intend to be around a while, like replacing your uniform and looking smart, it gives a good impression to your customers and those potential customers. My vans pay for them selves in their first year as they are as important as the tools in the toolbox!I try to change every 3 years so never out of warranty
Re: Contract Van hire – any thoughts?
most of us have been there, done that with the old vans when we first started, would like to think we have moved on a bit since.
Re: Contract Van hire – any thoughts?
It was good to hear from others on their experiences on contract van hire. I did some working out on the maths, it turns out that it would have costed me £5k in the first year. Deposit, admin fee, insurance and monthly fees. The second year would be cheaper. It was a choice between pay cut or shiny new van.
The VAT seems to catch me out as I am not VAT registered. Sadly I only have 3 years no claim bonus on the insurance therefore insuring a brand new van will push my premiums double on what I am currently paying. At the moment I am paying £600 a year on a 14 years old van. To insure a Renualt Trafic is eye watering £1400 with £500 excess.
I just had my brakes cleaned out on my 14 years old Fiat Scudo as it was making scraping noise even though it was fitted with new pads and disc three months ago as part of her service, on the invoice there was an advisory notice saying the rear shocks are leaking. Now I am having to book the sodding van into the garage again for next Saturday to minimise the disruption.
I am currently spending on average £150 a month on repairs. I am now looking at plan B or C. Plan B hire purchase a used van that comes with full service history possibly a six years old model, or plan C buy a 10 years old van with my savings which is a few thousands and start all over with the repair costs which still works out cheaper than plan A and B!
Do I want to risk upsetting my customers or miss out the chance of having repeat custom whilst my van in the garage for repairs? Tough choice, ideally no I do not want to risk it but I can’t afford it either way! I assumed that Contract Hire would be cheap option which it is true if you have large amount of cash to start off with and can afford the high insurance with 3 years no claims and huge excess.
Catch 22!
Re: Contract Van hire – any thoughts?
How’s about then a S/hand low mileage ‘VAT free van’ from a local motor trader. My local van dealer has 100’s to choose from….. 💡
Re: Contract Van hire – any thoughts?
I ended up getting a loan from my bank which works out a lot cheaper and used the money to buy a six years old ex contract hire transit van with fsh and low mileage.
The reason for this was the mileage and do not want to get stung for going over or paying too much for too little.
Time will tell if it is worthwhile investment. Thanks for your thoughts, advices and sharing experiences.
Who knows in four years time, I might get onto Contract Hire but then again may get a loan.
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