What Are The Perks of Buying a New Van Outright?

Needing a new van if one in your fleet has given up the ghost, or even just starting out and requiring your first business vehicle are both extremely daunting concepts, usually incurring quite a large expense. There are such a high volume of different vans available on the UK market, you might not know where to start looking. 

In addition to the never ending makes and models of vans, there are multiple methods of funding available. Traditionally, you will be recommended two options - pay for the new van outright, i.e. the whole cost upfront in one payment. Or, you can lease it. 

Throughout this blog we will delve deeper into buying a new van outright compared to leasing it. Explore the benefits and advantages, as well as pointing you in the direction of a trusted van retailer in the UK. 

What are the Alternatives To Buying a New Van Outright?

Realistically, as a business owner, or if you are just buying a van for personal use, you have two options. Buy the van outright, or lease the van. 

Buying a New Van Outright 

When you buy a new van outright, it means you pay the full purchase price of the van in one lump sum, without taking out a loan or entering into a leasing agreement. You become the immediate, full owner of the vehicle. This approach avoids interest payments and long-term financial commitments associated with financing or leasing.

Leasing a Van 

A leasing arrangement is almost the opposite of buying the new van outright. Essentially you will never actually own the van. Leasing the van is a long term rental agreement, offering exclusive use of the van for yourself/your company for the contractual amount of time. You will pay initial rental to drive away with it, you will then pay instalments monthly, for the agreed amount of years. This can last anywhere between 1-5 typically. When the contract ends, the van will be given back to the leasing provider without any obligations. 

Van leasing has grown increasingly more popular over the past few years, most notably because you do not have to have full capital for the van upfront. However, there are a number of downsides to leasing a van rather than buying outright:

• If you choose to terminate the contract early, the costs can be excessive. 
• Monthly cost of the van is based on mileage, so not ideal for long haul.
• Excessive charges will be placed onto the contract if you exceed the mileage allowance. 
• It is essential for the van to be returned in as good condition as it was leased out in. 
• The vehicle you lease must be insured with full comprehensive cover.
• There is no option to buy this vehicle once leased, and it is not really yours. 

What are the Benefits of Outright Van Purchase?

Buying  a new van outright, has a number of advantages over the opposing option to lease a van:

1. No Ongoing Payments: Once you have paid for the van, there are no monthly payments or financial obligations related to the purchase.
    
2. Total Ownership: you can use it without any restrictions often imposed by lease agreements, such as mileage limits or customization restrictions. This is particularly useful for businesses that have high usage rates or need to modify their vehicles for specific purposes.
    
3. No Interest Costs: Financing a van typically involves paying interest on top of the principal loan amount. By purchasing a van outright, you avoid these interest charges, which can add up to a substantial amount over time.
    
4. Tax Advantages: Depending on your location and business structure, you might be able to claim tax deductions for the purchase of a business vehicle.
    
5. Simplicity: Buying a van outright simplifies the acquisition process. You won't need to worry about credit approvals, meeting leasing qualifications, or dealing with the complexities of loan agreements.
    
6. No Mileage Restrictions: Leased vehicles often come with mileage caps, which can be restrictive for businesses that need to travel long distances. Owning your van outright eliminates these concerns.

What are the Disadvantages of Buying a New Van Outright? 

Each of the benefits above will vastly outweigh the negatives to buying a new van outright. However, if you want to make a fair judgement:
 

1. High Initial Cost: New vans to buy outright can be costly.
    
2. Depreciation: This means that the value of the van decreases significantly from the moment it is purchased, often dropping 20% to 30% in the first year alone.
    
3. Opportunity Cost: The money spent on purchasing a van outright could potentially be invested elsewhere within the business for a higher return.
    
4. Maintenance and Repair Costs: When you own a van outright, all maintenance, repairs, and operational costs are your responsibility. While new vans for sale typically come with warranties, once these expire, all costs fall on the owner. These expenses can be significant over time, especially as the vehicle ages.

When looking to buy a new van outright we would highly recommend choosing a well reputed dealership such as Discount Van Sales. They offer a huge range of new and pre-reg vans to buy outright.