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Looking for a new van? Have you considered Finance Lease?

Jul 15, 2019 | News

Looking for a new van can be an exciting, nervous and potentially stressful time as you mull over all of the possible new vans and van finance options. At Car & Van Finance Direct we are here to help, here we take a closer look at van finance lease as a way of financing your new van!

Van Finance Lease

If you’re not fixated on owning the van at the end of your van finance term, then finance lease may well be for you. Finance lease is one of the most flexible and cheapest ways to get a new van on finance. You start by paying an initial deposit (minimum of 3 monthly rentals), then fixed monthly rentals for the remainder of your contract which can last from 2 to 5 years.

At the end of the finance lease agreement you have a legal requirement to sell the van, this is to generate the funds to cover a final ‘balloon payment’ due at the end of the van leasing term.

This final balloon payment figure is calculated using the age of the van and the projected total mileage at the end of the lease. For example, if you have a three year contract and a mileage allowance of 10,000 miles per year, then the final balloon payment will reflect the value of a three year old van with 30,000 miles on the clock.

There is no guarantee what your van will be worth at the end of the contract, however if you happen to sell the van for more than the final balloon payment you get to keep 97.5% of the profit with the remainder going to the van finance company for administration costs.
It is possible to offer a finance lease without a balloon payment, if this is of interest to you just let us know and we’ll offer a quote without one.

Van Finance Lease benefits

One benefit of van finance lease is the ability to offset your monthly rentals against your tax bill, as well as offsetting your VAT against your tax bill.

There is also the possibility that you will make a profit from selling your van. Another benefit is that there aren’t any mileage restrictions, at least in the strictest sense, with other van finance options specifying an additional charge if you go over your mileage as high as 7p per mile.

With van finance lease, your projected mileage figure is effectively your mileage allowance, as this is used to calculate your final balloon payment. This means that by exceeding your projected mileage then it could affect the final value of the van and have to cover some of the balloon payment out of your own pocket. On the other hand if you cover less mileage than anticipated, then you should have a better chance to make a profit when it comes to selling the van.

Van finance lease is a very flexible van finance option, for example if you wish to extend your lease after the term has ended you have the option of a secondary rental where you pay off the balloon and make a one-off secondary rental, this allows you to keep the van for another year, but are still legally required to sell it at the end of the period.

If you wish to settle the van finance lease earlier than planned then you can contact us to obtain a settlement figure.

All vehicles from Car & Van Finance Direct on a finance lease agreement include a full manufacturer’s warranty, free UK wide delivery and the first year’s road tax and breakdown cover.

New vans on finance lease

Looking for a new van on finance lease? Or maybe you’d prefer van contract hire or van hire purchase? Car & Van Finance Direct are here to help! Simply fill in a contact form or call us on 02920 789234 to get the ball rolling on a brand new vehicle today!