Van Leasing Explained

Van Leasing and Contract Hire

Van leasing and contract hire has never been more popular. Today, Contract Hire in the UK is responsible for over 40% of the UK’s company vehicles, this has risen from just 5% of company vehicles acquired through contract hire in 1980.

Many businesses prefer contract hire through the many cost benefits associated with this method of finance, for example:

• Various VAT benefits and savings
• The benefit of a single agreed monthly payment
• Capital not tied to purchase of a company vehicle can be better used elsewhere in the business.

OVL Group Ltd has over 21 years experience specialising in van contract hire in the UK. Please contact us if you wish to discuss the benefits in more detail.

How does van leasing work?

Van leasing means you enter an agreement to pay an amount per month to drive a new van. The agreement is usually for three years and at the end of the term you return the van, or there can be an option for you to continue the lease for another year.

There is an amount to pay at the start of the agreement and then an amount per month. The amount payable at the start is usually stated as a multiple of the monthly payment. You will see 3 + 33. So if the monthly payment is £200, the amount payable at the start is 3 x £200 = £600. And then £200 per month for the three years of the agreement. If the agreement is stated as 6 + 33 then that would be 6 x £200 = £1200 and then £200 per month. Paying more at the start reduces the monthly payments.

Mileage with van leasing

When you sign up for a van lease part of the agreement is a statement of how many miles you expect to drive per year. This maybe 15,000, 20,000, 30,000 or whatever you expect it to be. It’s a good idea to be as accurate as you can because if you underestimate it there will be an amount to pay at the end of the contract. In the agreement this is stated as a x pence per mile and is typically around 10 pence per mile. So if you were to do 2000 miles over the agreement, there would be 2000 x 10p = £200 to pay. It’s done like this because the amount you pay per month is based on the value of the van at the end of your contract, and if you do more miles than expected the van will be worth that much less.

Maintenance

Maintenance in an agreement means that the costs of maintaining the vehicle including tyre replacement are included in the contract. People who chose this option often do so for peace of mind and so that they can budget more easily for their monthly costs. If you sign up for FleetManagerPlus, you can enter your current mileage on the system and it will tell you whether you are on target to achieve your agreed mileage or not.

For more details of van leasing or if you have any questions at all please call us on 01491 615 500. We’re here to help and glad to receive your calls.