Your New Courier Van: Buying Vs. Leasing

Whether you are thinking of undertaking courier work for the first time or it’s time to renew your current van, weighing up whether to lease or buy a delivery vehicle outright can be a tricky decision.

Of course there are pros and cons on both sides. Buying a van will mean that you own the vehicle and so can do whatever you like with it (including selling it). Leasing a vehicle will mean you won’t own it, so you will be able to get a brand new one at the end of your lease period without worrying about selling a previous vehicle.

Everyone knows someone who swears one is better than the other for those doing courier work, so here I’ve tried to give an objective view of the differences between buying and leasing. I hope it will make deciding which will work best for your business a little bit easier.

Buying

Buying a van means that you pay a lump sum of money for the purchase of a van which then belongs to you for as long as you want to keep it.

The Pros

  • Buying a van gives you the freedom of doing whatever you like with it. You can add signage, build a shelving unit in it and no one will complain.
  • There is a one-off payment and then no regular ongoing expenses, other than maintenance and insurance.
  • You own it so there is no mileage limit (as there usually is with a lease agreement).
  • You can claim the cost of buying the van as an expense against your income tax bill.
  • One of the most important advantages of buying is that you are entitled to sell your van if your circumstances change or you need a cash injection.

The Cons

  1. A new vehicle depreciates in value the moment you drive it off the forecourt, so you will not be able to sell your van for what you paid for it.
  2. You will be responsible for all maintenance costs, which can be expensive when clocking up the high mileage associated with courier work.
  3. You will also be liable for insurance and tax costs.

Leasing

The important thing to understand is that with most lease deals you will never actually own the vehicle. You are effectively paying (usually monthly) for the use of a vehicle for a specified period (often between one and five years).

The Pros

  • The vehicle you lease will be new and you will keep it for a specified time, after which you can simply hand it back and take out a new lease on a new vehicle.
  • You don’t need to be able to come up with the lump sum required for purchase.
  • Many lease deals will cover maintenance and repair costs (some will even include insurance in the monthly cost).
  • The regular payments make it easy to budget for.
  • There is sometimes the option to buy the van at the end of the lease agreement.
  • You can claim the cost of leasing the vehicle as an expense on your tax return.
  • Any depreciation in its value will not affect you.

The Cons

  1. Most lease deals will have a mileage limit – the higher the mileage limit, the more your monthly fees will be.
  2. You do not own the van so any damage or un-agreed changes to the vehicle will incur a cost when you come to return it.
  3. You must ensure that you are able to meet the payments each month.
  4. You will be tied into a contract which, if your circumstances change, may be difficult or costly to get out of.

Choosing which option is best for you is going to come down to your own bank balance or your confidence in meeting monthly payments, but hopefully this objective guide will help you to make an informed decision.

Norman Dulwich is a correspondent for Courier Exchange, the world's largest neutral trading hub for same day courier work in the express freight exchange industry. Over 4,500 transport exchange businesses are networked together through their website, trading jobs and capacity in a safe 'wholesale' environment.

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