Van leasing – contract hire vs finance lease. What is the best option for electricians?
A van is an essential item for a self-employed electrician. What type of van you get will involve a fair amount of research and the pros and cons of monthly payments as against owning your own van. A new van will set you back a fair chunk of money and unless you have several thousand pounds floating around in your bank account, chances are, you'll end up with an older van which could become costly in terms of maintenance, tax and even reliability. You need to be able to trust your van to get you to and from jobs reliably.
An old van can give also give the wrong impression to customers – a nice well kept van gives a professional appearance and in many cases can actually save you money.
Leasing a van is generally hassle free so long as you meet the monthly payments and don't exceed mileage agreements. Every 3 years on average you can get your hands on a brand new van that won't depreciate year on year and without the hassle that ownership brings.
With many lease options out there, it can be confusing to know which deal really is a good one. We're not going to tell you how to spot a good deal – we're pretty confident you can take care of that yourself.
Clue yourself up on lease options before you start
Many people assume that lease contracts are the same and only concern themselves with the bottom line. However, there are two different types of lease options and as electricians, this is pretty essential 'must know' stuff.
The two options are contract hire and finance lease. Both types seem to mean not a lot on paper but upon delving a little further into the options, there are financial implications that could affect you as an electrician.
By far the most common form of lease agreement is contract hire. This is where you pay a set monthly fee for the van and this covers use of the van up to an agreed mileage allowance, tax and often maintenance and breakdown cover leaving you with peace of mind when driving your van.
Providing the van is returned without damage at the end of the lease there should be no problems.
It is easy to think you have spotted a great deal and signed up without knowing about a lesser well known option that could actually reward you financially.
Finance lease is designed for those who work in occupations which involves more practical use of the van where there is a chance damage could be caused. However, demonstrate good use of the van and you could be quids in.
Finance lease is similar to contract hire in that you pay an agreed monthly fee and have all the benefits you would expect in a contract hire arrangement.
The difference is what happens at the end when the van is sold. If the company is able to sell for a higher price due to a better condition or lower mileage then you receive the difference. Another option is to purchase the vehicle at a bargain purchase price – so it good be used as an economic way to acquire a vehicle if you didn't want to commit to years of leasing a van.
What is the best option for electricians?
Not every electrician is going to run their van into the ground. With finance lease you have far more control over how you manage your van and will reap the benefits over the longer term. With the more common contract hire, you are simply paying for the privilege of looking after your van for which you will receive no reward at the end of the lease.
Finance lease wins the day – at least from out point of view anyway!