Should I Lease A Van Or A Car For My Business?

What is a business lease?

A business lease, or Business Contract Hire (BCH), allows you to pay for a vehicle on a monthly basis, rather than buying it outright. While personal leases are signed by an individual, business leases are held by the company (or sole trader/partnership). This means it counts as a business expense, which has many benefits, including reclaiming VAT, reducing the bottom line on your company's balance sheet, and more.

What are the pros and cons of a business car lease?

Whether you're travelling to meetings or transporting goods, a company car can help streamline your work and improve your business's service. However, choosing between a car and a van for your lease can be a difficult decision. Here are the advantages and disadvantages of choosing a car for your business lease:

– Pros

• Typically lower insurance premiums and tax rates than vans
• Wider variety of models – hatchbacks, saloons, convertibles, etc.
• More fuel-efficient and lower daily running costs
• Better suited to a mix of business and personal journeys

– Cons

• Limited space for transporting goods
• Luxurious interiors are less resistant to potential damage
• Lower seating provides a more limited view of the road

What are the pros and cons of leasing a business van?

Cars are by far the most common vehicle on our roads, but a business van lease could be the perfect fit for your company. If you’re looking to move heavy goods on the job, you’ll need a powerful vehicle that can handle a large payload. Here are the upsides and downsides of business van leasing:

– Pros

• Spacious interior for carrying goods, tools, and other work essentials
• Robust interior that is less prone to damage
• Lower maintenance costs in the long-term

– Cons

• Lower speed limit than cars on certain roads
• Large, heavy build can affect parking and handling
• Less space for passengers depending on the cabin type

Which vehicle should I lease for my business?

While costs can vary due to differences in insurance premiums, maintenance fees, and tax rates, choosing between a car and a van for your business mostly comes down to personal preference. Some businesses are better suited to driving cars, while others require a van for heavy-duty tasks.

Cars are ideal for personal journeys as well as business travel, so if you’re looking for a vehicle that you can use on a daily basis outside of work, it’s likely that you’ll want a comfy, easy-to-drive car rather than a van. However, if your journeys in a business-leased vehicle are exclusively work-related, you’ll be able to reclaim 100% of your VAT. Therefore, if you’re looking to keep your tax rates low, a van may be a better choice.

Vans are also ideal for transporting goods, machinery, tools, and other large items that may not fit in a car's boot. While cars are often better for transporting passengers, the spacious, robust interior of a van is perfect for large payloads.

Can I switch between leasing a car and a van for my business?

Once your business lease expires, you’ll be able to choose a new vehicle for your next contract, meaning you can switch between a car and a van after your lease’s end date. However, you generally won’t be able to switch your vehicle in the middle of a contract unless you pay an expensive early termination fee.

If you’re looking to switch vehicles when your contract ends, you’ll first have to return your existing vehicle to the finance company. Then, you’ll be able to negotiate a new deal to switch to a van or car. Alternatively, you could enquire about flexible hires or short-term leasing with your provider, as some companies will allow you to return your vehicle at short notice.

Before you make the switch, be sure to check your contract’s details, as not all providers will allow switching between vehicle types.