Business van leasing 101: The ultimate 2023 guide

All the ins and outs of business van leasing you’ll ever need to know

Want to lease a van for your business, but not sure how it works?

We’ve compiled a comprehensive guide to leasing a van for businesses so that you can make the right decision for your company.

The different funding options on offer can get confusing, especially when all the acronyms are thrown into the mix. Between the BCH and the PCH and the PCP and the HP, it can be an admin headache you don’t have the time for to work out the best way to get your hands on a new van.

Never fear.

Our van leasing consultants are experts in this field, and they’re on hand to answer any questions you might have to make the process as simple as sticking on the kettle for a cuppa.

We’ve also pulled together this business van leasing 101 guide, so you can access all the information you need to make the decision in one place. It couldn’t be easier to get behind the wheel and keep your business running.

How does business van leasing work?

Business Contract Hire, otherwise known as business leasing, is an easy way for your business to be able to use a brand-new van without having to pay thousands of pounds up front.

It’s similar to renting: you’ll pay an initial deposit, a series of fixed monthly periods for a specified time, and at the end of the contract you’ll hand the van back, leaving you free to lease your next vehicle. The only difference between BCH and PCH (Personal Contract Hire) is that with BCH, you’re leasing the van on behalf of your business rather than just for your personal use.

There are some limits as to who can take out a BCH agreement, and you’ll need to consider what you’re using the van for to make sure you stay within the fair wear and tear guidelines, but it’s an easy and hassle-free way to get behind the wheel of a van.

Brand-new vans tend to be more dependable than used ones too, because they’ve not done any heavy lifting before, so not only can van leasing help your monthly budget by spreading the cost, but it can also help reduce vehicle downtime and additional servicing costs.

Can I lease a van through my business?

To be eligible for a business van lease, you must be one of the following:

• A Limited Company or Private Limited Company (PLC)
• A sole trader
• A partnership
• A limited liability partnership
• A VAT-registered company

You can often get a business lease even if you’re a new business too – just get in touch, and we’ll do our absolute best to help.

What do I need to lease a van for my business?

A business contract hire agreement differs slightly from a personal contract hire agreement.

Instead of having your name on the contract, your company name will be on there, which means the documents that our funders need to approve your finance will be slightly different.

You’ll need to provide:

• The name, date of birth and marital status of all directors
• Company registered address
• Company registration number
• Company bank statements
• Annual net income

The business will also need to go through a credit check – you need good credit to lease a van – and you might be asked for additional details, like the number of years the business has been trading. 

Benefits of leasing a van for my business

There are a multitude of benefits of leasing instead of buying a van for your business.

1. Affordable monthly payments

Having fixed monthly payments for your van lease can help improve your cash flow. 

Other than the initial rental, which can be as little as one month upfront, you don’t have to stump up huge amounts of cash upfront, freeing up capital to be used elsewhere. 

You’ll also be able to keep on top of your monthly budget. A fixed monthly cost for your lease means that, aside from insurance and servicing, the majority of your vehicle’s costs will be spread over the length of your contract. 

And if you take out a maintenance plan, there will be less chance of having to find the money for extras like tyres or other disposables. 

2. No depreciating assets

Unlike if you buy a van, and then have to faff about trying to sell it when it’s time for a new one – and often losing money in the process – when you lease a van, you simply just return it to the funder at the end of your contract, and you’re free to move on.

The cost of the depreciation is already factored into your lease, and you don’t have to worry.

3. Tax benefits

One of the biggest benefits of business van leasing is claiming back the VAT. 

All of our business van deals are advertised ex-VAT because you can claim back the VAT on the lease. And with a van lease, even if you use the van for personal as well as business use, you can still reclaim 100% of the VAT, not just 50% like with a business car lease. 

What are the disadvantages of leasing a van?

Like with anything in life, there are downsides to leasing and considerations you’ll need to bear in mind. 

1. Mileage limits

Before you take out a van lease contract, you’ll have to estimate how many miles you travel on average per year. This is because the more mileage you do, the higher the depreciation on the van, so funders will charge you an excess mileage charge if you go over your agreed limit.

It’s better to be safe than sorry, and overestimate how many miles you do so you’re never caught out with additional costs when it comes time to return your lease van.

2. No option to buy

Unlike HP (Hire Purchase) or PCP (Personal Contract Purchase), there’s no option to buy your vehicle at the end of your contract. 

This does mean that your monthly payments tend to be more affordable than with the other two finance options, and if you’re not fussed about ownership, BCH is the best way to get your hands on a brand-new van.

It also means that at the end of your contract, you’ll always be free to lease the newest – and best – models.

3. Fair Wear and Tear

The British Vehicle Rental and Leasing Association (BVRLA) sets out guidelines that all funders adhere to when it comes to the condition your van can be returned in.

These are called the Fair Wear and Tear guidelines, and provided you return the van in a condition that complies with these guidelines, you won’t have to fork out for additional extras. But should there be excess damage on return, your funder will charge you, so it’s worth bearing this in mind. 

Should I buy or lease a van?

Ultimately, the difference between buying and leasing is simple: if you buy a van, it’s yours and you own it. If you lease, the van will always belong to your funder and you’ll have to return it when your contract comes to an end.

But if you’re not fussed about ownership, and you want a hassle-free, affordable way to get behind the wheel of a new van, then leasing is the answer you’re looking for. 

It’s a great option if you’re after a fleet of vans too – you can get your hands on £100,000s worth of vans quicker, for less money because you’ll be paying for them monthly rather than all at once.

How much does business van leasing cost?

There is no easy answer when it comes to determining the cost. 

The variables taken into consideration when calculating your monthly payment include the cost of the van, the residual value and how much you want to pay for the initial rental, which could be anything from one month to nine months upfront.

In addition, because you’ll be taking out a BCH agreement on your van, you’ll be able to claim back the VAT, which can make it a more affordable prospect than if you took out a personal lease agreement.

Our van leasing experts are on hand to answer all your questions when it comes to cost and can help you find the right deal at the right price.

What happens when my van lease ends?

A short while before your lease agreement comes to an end, your funder will be in touch to arrange a free collection. All you have to do then is hand the vehicle over to the driver and you’ll be free to take out a new lease contract on a brand-new van.

The driver will inspect the van for excess damage, and you can be charged for this – and for excess mileage – but as long as you’ve stuck within the guidelines, you’ve got no worries about any pesky additional costs cropping up.