As contract hire continues to be the most popular way to fund company cars, it’s no surprise van contract hire is on the rise too.
Reservations in the past around the fear of not being able to tailor the van to business needs, going over mileage or the condition the van is returned at the end of contract are outdated. Although the concept is the same for vans or cars, contract hire has become better suited to the commercial vehicle fleet market.
We look at the top 7 reasons why more companies are opting to fund their next company van through contract hire.
1. Free up working capital
When outright purchasing a van, you will need a significant amount of capital to initially purchase the vehicle. Whereas, when funding through contract hire, the cost is spread out over the fixed term of the contract, and only a small initial outlay is needed to start the deal. Therefore, the capital can be better utilised elsewhere in the business.
If you already own your van fleet, you may think it’s too late to benefit from contract hire? Not with sale and leaseback. Quite simply, we buy your existing fleet and lease it back to you. If you own a 25-vehicle fleet, this could generate a cash injection of £250,000!
2. One fixed monthly payment
If you opt for maintained contract hire, included in your one fixed monthly payment are all service, maintenance, and repairs (SMR) fees. As a result, you will be aware of exactly how much your van will cost to run each month. This makes it far easier in terms of budgeting and managing your cash flow.
3. Tailor your van to your business needs
Contract hire doesn’t mean you can’t make your van your own.
Although you don’t own the van, that doesn’t stop you tailoring your van for the job in hand. From the small things like signage and ply lining, to bespoke body conversions and tail lifts, there are endless bespoke conversion options available to fit your exact business requirements.
4. Newer vans, greener vans
The average vehicle age of a large commercial vehicle at auction in 2016 was nearly four and a half years old, and had covered over 96,000 miles (Picton; for Glass Business, 2016).
Purchasing a new van may not be feasible, due to the price to purchase upfront, so businesses may opt for an older second-hand van. However, as you pay a fixed monthly cost when funding through contract hire, your budget can stretch further. Therefore, you may be able to fund the newest vans on the market, which are likely to have improved technology, the latest safety features, and are better for the environment.
5. Realistic end of contract recharges
We understand a van is a working vehicle and might not come back to us at the end of the lease in showroom condition! We are realistic about wear and tear and take a different approach to our de-fleeting process and end of contract recharges.
Unlike other contract hire providers, all our vehicles are returned to our head office, where our experts can sensibly assess whether there is any significant damage to your vans. You may never see your vans before it is returned to us, as we can deliver them straight to the driver. Therefore, if you aren’t happy with recharges, we can invite you to our head office where our experts will show you why your vans have incurred recharges.
6. Managed mileage
Your business may cover a wide range of the UK meaning your vans rack up high mileages. As contract hire sets fixed annual mileages, many may think that this method is not suitable.
However, high mileage doesn’t automatically rule contract hire out. Contract terms can be set to annual mileages up to 75,000 miles. We can work with you to find a contract profile that will best suit your mileage requirements. And to help manage your mileage, our online portal and regular fleet reviews will keep you appraised on how your van is tracking.
When you own a van, it is your responsibility to dispose of that van when you want to replace it. Unfortunately, you won’t be able to sell it for the same price you bought it for due to depreciation.
Parkers revealed that van owners lose more money through van depreciation in the first three years than any other factor such as fuel, insurance, and servicing costs. For a three-year-old van that has done 60,000 miles, an average of between £14,000 and £15,000 will be lost through depreciation. Whereas, through contract hire, you don’t have to worry about how much your van has depreciated as your leasing provider will be responsible for the depreciation.