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Special report: Funding
Finance: which optiThere’s more than one way to finance a van. Leasing and outright purchase are the most obvious options but there are subtleties within the former method in particular, that can make more sense depending on the type of business you’re running
fffffffffUltimately, the type of funding should be dictated by how the vehicle is going to be used, as Mark Cartwright, head
of vans at the Freight Transport Association, explains.
“If it’s a ‘doing’ vehicle, it’s a mobile toolbox, the driver gets out of the vehicle, digs a hole in the road, fixes your washing machine
– the vehicle is technically a mobile shed. The ‘carrying’ vehicle is what it says – delivery – so it will start and finish the day empty dependant on what its particular trade is. In
our estimation, [the van parc is] something like 70% ‘doing’ vans rather than ‘carrying’.”
If your vehicles are carriers and you are a large company, there’s a strong case for leasing according to Mark Jowsey, manufacturer liaison director at KeeResources.
“If you’re a major fleet acquiring vehicles for a permanent task, say
if you’re a supermarket chain and you’re doing home delivery, that’s a good reason to take contract hire, particularly with an appropriate relief vehicle included.”
Businesses would also do well
to consider leasing companies offering tailor-made vans for specific purposes. “If yours is a ‘doing’
van, you’re pretty unlikely to buy something off the shelf. There’s a fantastic opportunity for the more proficient finance providers to
supply a vehicle that’s fit for use with the kind of racking and external equipment that suits the job,” says Cartwright.
“I know a few finance providers have had a bash at this. They’ve said ‘here’s a standard electrician’s van, here’s a standard plumber’s van, which is a great package – but it hasn’t particularly set the world on fire.
“I think they probably were a little bit ahead of the curve, and your average butcher, baker, candlestick maker hasn’t necessarily stumbled onto the fact that he could go through one of the lease providers and come away with something a lot better for his business at probably no real extra cost.”
Short term
Rental is always an option for the short term but it can quickly become more expensive than conventional leasing if the hire runs to anything more than a few months. It is appropriate for companies working fast-turn contracts, though.
“I know a major construction company that does a lot of
specific contracts and in those circumstances, it’s easier to rent,” says Jowsey, “if they’re on a three to six-month project, they’ll take vehicles on rental, then at the end of the contract they don’t have to worry about being tied up, either in
contracts or in capital expenditure.” Being working vehicles, vans
inevitably pick up damage and the severity of their wounds can dictate how best to fund them.
“Generally, if you’re going to knock them around, they’re going to have a hard life and do a lot of miles, you’re probably better off buying, because the penalties will be fairly significant on a lease,” adds Jowsey, “you’ve then got complete flexibility of how long you retain them for,
how you reallocate them to balance mileage and if you find you’ve got surplus, you can dump them.”
However, certain types of leasing are more fitting than either rental or straight contract hire, particularly for heavily used vans, as Paul Coley, principal consultant at leasing firm Lex Autolease explains.
fffffIf you’re going to knock them around, vans pick up damage and you are probably better off buying, because the penalties will be fairly significant on a lease
16 TVD lssue 27 2016
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