Thread: Van Contract Hire

Does anyone do it for their work van?

What's the best way? Is it better than buying your own?

Cheers.

All depends on your financial position and cash flow and the deal on the day. Is owning your van outright important to you? Do you want a shiny new van with a guarantee and a service plan and you cannot afford to just buy it? Is your accountant telling you it's a good move?

Originally Posted by RichH

Does anyone do it for their work van?

What's the best way? Is it better than buying your own?

Cheers.

No. I have never had contract hire and never understood why anyone would.

If you buy the van outright you can claim back the VAT (if you are VAT registered) and depreciate the asset against your taxable profit each year. When you replace the van you are free to sell it to whoever you chose, inc yourself, for a nominal sum.

If you cant afford to buy a van outright you can get HP which lets you pay monthly, claim back the VAT (if you are VAT registered) and leaves you with an asset at the end of the term. You can claim the interest charged against your tax bill. Again at the end of the term the van is yours to dispose of how you please.

If you dont want the asset. You can lease a van. The van will never be yours, although there are ways you can dispose of it to a third party (your missus, mum whatever) VAT is charged on the repayments but you can claim this back in your monthly / quarterly return. All of the payment each month can be offset against your tax bill as you are effectively hiring the use of the asset from a leasing company.

Contract Hire, is just like going to Hertz, and hiring a van but for a predetermined period 12 months - 36 months usually. It is their van, they service it and tax it and sometimes even insure it and charge this in their monthly hire. The problem is they usually charge the earth for this and it works out far dearer than leasing. When I was an employee and had company cars on contract hire they were never well maintained and were always being snatched back for servicing, usually when you wanted to use them. Be careful of this with a van as it will presumably be full of your tools / stock so you dont want it dragged back to the rental company for servicing in work hours. They should, depending on the agreement offer a replacement vehicle but that involves unloading your van and loading the replacement then doing the reverse when yours comes back.

The monthly contract hire rental is far more than leasing and whenever I have done the maths, lease + actual cost of insurance + actual cost of servicing +actual cost of tax, tyres,mot etc etc works out cheaper. pLus you get the option of buying tyres from the cheapest place, getting servicing done at weekends etc etc.

I may be missing something but I have never seen an actual or financial advantage to contract hire. Unless you are so busy or so useless you cant sort out insurance and servicing yourself.

Huh, some good points.

Also depends on your mileage,the more miles you do you have to factor in a penalty type charge for excess miles (I think it is usually about 10,000 miles).I do about 60,000 miles a year.I paid £18.500 for a VW Crafter and accepted that after 3 years and nearly 200.000 miles is will be worth fuck all,so it has in effect cost me £6000 a year to run.Only you can decide how much it will earn you per year,but most of the money you spend will come of your tax bill anyway.When I looked into leaseing and told a couple of companys my estimated mileage they were not interested in supplying me a van anyway.

Well yeah. I've only just started working for myself, so don't really have the cash to splash on a new van as yet.

The work I do tends to take me all over so a good 20k+ per year miles wise, has been as high as 40k.

I'm smoking around (literally) in an old smiley tranny for now, so may have to see if the ol' girl can do another year. It just doesn't "look" that good when you are trying to be a professional that's all

Agree with the not looking professional,I deliver quite an `upmarket` product so have to look good.As said before high mileage leases are really expensive,if you are just starting out stick with your old van and upgrade when the good times start rolling in.

Agreed, seems like a good idea to me.

I buy them at about a year to two years old then sell when they begin to look very dented. If you lease then those dents cost you lots. Might not be you denting it but plenty of tossers do it for you. Bank loan is still the cheapest option unless you are buying new on a deal and thats if the bank will give you any money.

If it's not your own van you need to get friendly with a cheap bodyshop and "speedo correction" man before you hand it back