Can a new business lease a van?
Launching a new business is exciting and rewarding, especially as you plan your transport options. One of the many options available to companies is vehicle leasing. This article will explore leasing options for new and startup companies and what you need to do when you apply.
Are new businesses eligible for van leasing?
Generally, businesses should have two years of accounts and trading history to qualify for van business leasing. However, if you’ve been in business for fewer than two years, do not worry — this isn’t the end of the road. Depending on the finance provider, an underwriting team may ask for additional information to assess your situation, including:
- Three months of business statements, drafted or published management accounts, profit and loss statements, and details of your trading history.
- Personal credit scores as proof of reliability.
- A larger initial payment.
New business van lease requirements
The checks and requirements for new business van leasing vary between lenders, but generally, they include the following:
- Credit score check: A van lease company will perform a credit check on your business. A healthier score means it is easier to secure a van leasing deal. The lender may consider a personal credit score if your business lacks a credit history.
- Proof of business registration: You might need to provide evidence of business registration and registration with relevant authorities to your company.
- Trading history: Financial records, such as profit and loss statements and balance sheets, may be required by the lender to demonstrate your ability to meet payments.
- Business plan: Some leasing companies require a detailed business plan that outlines your company’s objectives. This information helps them assess your business’s risk and viability.
What documents do I need to apply for a van lease for my new business?
A van leasing application will require you to provide a variety of documents, which might include:
- Business address history
- Opening balance sheet
- A Director who can act as a guarantor
- A full UK driving licence
- Proof of UK residency
Many lease companies will also require that you do not have recent county court judgements (CCJs) or mortgage arrears. A lender’s decision may also be affected if you have a history of failed businesses.
What types of van leases are available for startup businesses?
There are a variety of new business van leasing options available to suit your business needs, including:
- Business contract hire (BCH): The most popular way to lease a van is through a BCH, which means the finance provider will remain the vehicle owner once the initial leasing agreement ends. This contract is a popular option for businesses that regularly change vans.
- Finance leasing: Popular for self-employed and sole traders, this lease type requires you to sell the van to a third party at the end of the contract, where you receive around 98% of the sale proceeds.
- Lease and hire purchase: With these lease options, you own your van at the end of the lease contract. While the contract is in place, the van is registered with your company, and you make fixed monthly payments towards owning the van.
Find out more about the different types of van leasing options. If you want to know which option could work for your company, get in touch with our team.
What are the benefits of new business van leasing?
Leasing a van as a new business offers various benefits and helps you save money in the long run. Let’s look at some of the most popular reasons new businesses lease vans.
Lower upfront costs compared to buying
One of the most significant advantages of van leasing for a new business is the lower initial cost, as you don’t have to pay a large deposit at the contract’s start. Many purchase deposits sit at around 10% of the overall purchase price. This option is helpful for businesses that don’t have a lot of capital.
Flexibility in terms and options
Van leasing offers new businesses great flexibility in contract terms. You choose the contract length, vehicle options, deposit size, and what happens to the van at the end of the contract.
Tax benefits
If you’re VAT registered and only use your leased van for business purposes, you will be exempt from paying company car tax. You’ll have to pay the Van Benefit Charge if you also use the van for personal use.
No depreciation concerns
Leasing a van protects you from depreciation, which represents the difference between the van’s value at purchase and the price upon its sale. In most cases, business owners exchange their van for a new one, which means they are unaffected by depreciation.
Maintenance and repair included in the lease
Manufacturers often include breakdown cover in the first year of warranty. You can also opt for an extra service and management agreement alongside breakdown and roadside assistance as extras within your contract. Find out more about Synergy’s own maintenance and roadside assistance package.
What to consider when leasing a van for your new business
Before taking out a lease agreement for your new business, it’s essential to consider various factors to ensure you get the right deal for your company. Some of the most important include:
- Van size: You will need to consider what size van you need for your work. Couriers, for example, often opt for smaller vans, such as the Ford Transit Courier. Those making deliveries or transporting goods may need larger vans such as the Fiat Ducato.
- Budget: When deciding on your lease, ensure the monthly rental is realistic and affordable. Browse through all the options for the van you want to find a price that works for you.
- Mileage allowance: Your van will have a mileage allowance, which means you will incur excess mileage charges if you exceed your allowance. You will find details of your mileage allowance and fees on your quote and order form.
- Initial rental: You’ll pay an initial rental at the beginning of your lease agreement. You decide how much you’ll pay upfront, and how much you pay will affect your monthly payments. A higher upfront downpayment means lower monthly payments.
Top tips to help your new business choose the best van lease company
Business owners are spoilt for choice regarding van leasing, but there are a few ways to spot more reputable companies. The Financial Conduct Authority (FCA) regulates the best lease companies. Many are also members of the British Vehicle Rental & Leasing Association (BVRLA) and are part of the Treating Customers Fairly (TCF) initiative. You can also conduct further research by reading customer reviews online and across social media.
Get the right van leasing deal for your new business
We’re experts in leasing vans and work with businesses of all sizes. From sole traders to national enterprises, we help companies find the best deals for them. If you’re interested in leasing your first van, contact a team member to guide you through the process.
