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How Does Van Leasing Work?

21 December 2023

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Whether you’re a small business owner, a fleet manager, or just curious about the ins and outs of van leasing, this is the perfect place to start. In this blog, we’ll walk you through the basics of how van leasing works and the key things you should think about before signing a contract. By the end of it, understanding van leasing will be as easy as driving your favourite route.

Key Takeaways

Types of Van Leasing Options

Van finance can be a bit of a maze, but it’s easier once you know the basics. Let’s look at the different types you might come across.

Contract Hire / Operating Lease

Contract Hire is like renting and it’s what we specialise in at First Step Vehicle Solutions. You pay monthly, use the van for a set time, and then return it – you don’t own the van at any point. This option often comes with mileage limits – go over these, and you’ll face extra charges. Same goes for any damage beyond normal wear and tear.

But it’s not just about borrowing a van with contract hire; there are some real perks to consider. Firstly, it’s hassle-free – you lease the van, use it, then hand it back at the end of the term. Easy. No balloon payments, no trade-ins, just hand over the keys. It’s a straightforward, no-strings-attached kind of deal.

It’s also a great way to manage your cash flow, as you only pay for the van’s use, not its full value. This can mean lower monthly payments compared to buying outright. Plus, since the van isn’t an asset on your books, it can have tax advantages for your business.

And let’s not forget the convenience factor: with contract hire, you’re always driving a modern van, and at the end of the term, you simply hand it back and can opt for a new one. This means less hassle with maintenance and no worries about depreciation. It’s a smooth, predictable way to handle your vehicle needs.

Finance Lease

A Finance Lease is like the Swiss Army knife of van finance. It’s flexible. Here’s how it works: you lease the van and make monthly payments. At the end of the contract, you can either pay a final balloon payment to own the van, trade it in, or even finance the balloon payment if you’re not ready to pay it all at once.

What makes a Finance Lease different from Hire Purchase? It’s that blend of leasing and buying. You get a slice of ownership equity, but without the full commitment of a purchase. This option is great if you want some flexibility at the end of your lease term. You’ll get a percentage of the van’s resale value too, which is a nice bonus.

Choosing A Vehicle To Lease

When you’re in the market for a leased vehicle, making the right choice involves weighing several key factors. It’s not just about picking a van you like; it’s about understanding the terms and conditions that come with it.

Once you know the type of van lease you’re going for, think about the insurance requirement. Leased vehicles usually need fully comprehensive insurance. This is non-negotiable, ensuring the van is fully covered in case of any mishaps.

Also, think about the cost to terminate the lease contract. Life is unpredictable, and sometimes you might need to end the lease early. Understanding these costs upfront can save you from unexpected expenses in the future.

Lastly, remember that with leasing, ownership isn’t in the cards. At the end of your contract, you won’t own the van. This can be a perk for some (say goodbye to depreciation worries!), but it’s important to be clear that the van will need to be returned or replaced at the end of the lease term.

Other Considerations

There are a few other things you’ll need to keep in mind too – how long you’ll have the van, how far you can drive it, and what you need to pay at the start. Let’s get into it.

Length of Contract Options Available

At First Step, we offer a variety of contract lengths for your van leasing needs. You can choose from 12-month, 24-month, or 36-month contracts. Each option caters to different requirements and preferences.

The shorter lengths – 12-month – are great if you like to switch up your vehicles or if you’re just looking for a bit more flexibility. It’s enough time to get comfortable with the vehicle, whilst short enough that you can adapt to changing business needs.

On the other hand, longer-term contracts give you the stability of having a reliable van for an extended time, which is great for ongoing business needs.

Mileage Limit Considerations

Choosing the right mileage limit for your lease is crucial. It’s not just a number; it affects your lease in several ways. When setting your mileage limit, consider:

Be mindful of the penalties for exceeding your mileage limit. These can add up, so it’s better to estimate generously. However, if you find your needs changing, some contracts allow you to update your mileage estimate, helping you avoid those extra charges.

Initial Rental and Deposit Requirements

Getting started with your lease includes some initial payments. Usually, you’ll have an initial rental payment, which can vary based on the van and contract terms. There can also be a security deposit to consider, which acts as a safety net for the leasing company. This deposit is typically refundable at the end of your lease, provided there’s no damage beyond normal wear and tear.

Get A Long-Term Van Lease From First Step Vehicle Solutions

If you’re considering setting yourself up with a long-term van lease, look no further than First Step Vehicle Solutions. With years of expertise in the field, we pride ourselves on offering competitive rates that fit your budget. Plus, our fleet boasts the latest vehicle models, ensuring you’re always behind the wheel of a modern, reliable van.

What truly sets us apart, though, is our 5-star customer service. We believe in making your leasing journey as smooth and hassle-free as possible. Our team is dedicated to guiding you through every step, from choosing the right contract length and mileage limit to understanding your initial rental and deposit requirements.

At First Step Vehicle Solutions, we’re not just about leasing vans; we’re about building lasting relationships with our clients. So why wait? Take your First Step towards a hassle-free, long-term van lease solution with us. Let’s get you on the road in style and with the peace of mind that only comes from partnering with the best in the business.

First Step UK Limited is authorised and regulated by the Financial Conduct Authority, our FCA Firm Reference Number is 654527. First Step UK is a credit broker not a lender. Vehicles shown are for illustration purposes only. All offers are subject to change at any time and are subject to finance approval and vehicle availability. First Step UK Limited registered address is 70 Market Street, Tottington, Bury, BL8 3LJ Registered in England.

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