Can I Lease a Van with a New Ltd Company?

Understanding the world of van leasing for newly-formed limited companies

Starting a new limited company (Ltd) can be an exciting time for entrepreneurs, and often, having the right vehicle to support your business operations is crucial. When it comes to acquiring a van for your business, leasing can be an attractive option, offering several benefits over purchasing outright. However, many new business owners may wonder: Can I lease a van with a new Ltd company? The answer is yes, and in this article, we will explore the ins and outs of business van finance, discussing the requirements and considerations for leasing a van with a new Ltd company.

Why Lease a Van for Your New Ltd Company?

Before diving into the process, let’s take a look at some of the reasons why leasing a van can be a great choice for your new business:

1. Cost-effective: Leasing a van allows you to spread the cost over a fixed period, making it more manageable than purchasing a vehicle outright. This can be particularly helpful for new businesses that are still building up their cash flow.
2. Tax benefits: Lease payments are generally tax-deductible, reducing your company’s taxable income and potentially lowering your tax bill.
3. Flexibility: Leasing agreements often come with the option to upgrade or change your vehicle at the end of the term, allowing you to adapt to your business needs as they evolve.
4. Maintenance and support: Many lease agreements include maintenance and servicing as part of the package, ensuring your van remains in good working condition without any additional costs.

Requirements for Leasing a Van with a New Ltd Company

While it is possible to lease a van with a new Ltd company, there are certain requirements that you need to meet to qualify:

1. Credit score: The leasing company will perform a credit check on your business to assess its financial health. A good credit score can make it easier to secure favorable leasing terms, while a poor score may result in higher interest rates or even a declined application. If your business is new and lacks credit history, the leasing company may also consider the personal credit scores of the company directors.
2. Proof of business registration: You will need to provide evidence that your Ltd company is registered with the relevant authorities. This typically involves presenting your certificate of incorporation, as well as any other required documentation.
3. Trading history: If your new Ltd company has been trading for a short period, you may need to supply financial records, such as profit and loss statements or balance sheets, to demonstrate your ability to meet lease payments.
4. Business plan: Leasing companies may request a detailed business plan outlining your company’s objectives, strategies, and financial projections. This helps them assess the potential risk and viability of your business.

For more information on obtaining van finance for a new business click here.

Choosing the Right Lease Option for Your New Ltd Company

There are several types of leasing agreements available, each with its own advantages and drawbacks. Here are the most common options:

1. Contract hire: This is a popular choice for businesses, as it offers a fixed monthly payment for the use of a van over an agreed period (typically between 2 and 5 years). At the end of the term, the van is returned to the leasing company with no option to purchase. This allows for easy budgeting and eliminates concerns about depreciation.
2. Finance lease: A finance lease allows you to rent a van for a fixed period, with the option to purchase it at the end of the term for a pre-agreed amount. This can be a suitable choice for businesses that want to retain the option of owning the vehicle.
3. Hire purchase: Hire purchase involves paying a deposit followed by fixed monthly payments. At the end of the term, you will own the vehicle outright. This option may be more suitable for businesses that prefer ownership and can afford the higher initial deposit and monthly payments.
4. Lease purchase: Similar to hire purchase, lease purchase agreements require a deposit and fixed monthly payments. However, at the end of the term, you have the option to either purchase the vehicle for a pre-agreed amount (known as the balloon payment) or return it to the leasing company. This can be an attractive choice for businesses that want flexibility in deciding whether to own or return the vehicle at the end of the term.
5. Personal contract purchase (PCP): Although primarily designed for personal use, some businesses choose PCP agreements for their company vehicles. PCP involves a deposit, fixed monthly payments, and the option to purchase the vehicle at the end of the term for a pre-agreed amount or return it to the leasing company. This option may be worth considering for businesses that want the flexibility of a finance lease, but with lower monthly payments.

Things to Consider When Leasing a Van for Your New Ltd Company

1. Budget: Consider your business’s cash flow and financial situation when determining the most appropriate lease option. Remember to account for not only the monthly payments but also any potential additional costs, such as insurance, maintenance, and taxes. For an idea of monthly payments visit our business van finance calculator page.
2. Lease term: Select a lease term that aligns with your business’s plans and growth projections. A shorter lease term can offer more flexibility, while a longer term may provide lower monthly payments.
3. Vehicle type and specifications: Choose a van that meets the requirements of your business, considering factors such as size, load capacity, fuel efficiency, and any necessary modifications or customizations.
4. Mileage allowance: Lease agreements typically include a mileage allowance, which is the maximum number of miles you can drive the van each year without incurring additional charges. Ensure the allowance is sufficient for your business’s needs to avoid excess mileage fees.
5. Maintenance and servicing: Check the terms of the lease agreement to understand your maintenance responsibilities and any included servicing packages. Regular servicing can help maintain the van’s performance and ensure compliance with the leasing company’s conditions.

Conclusion

Leasing a van with a new Ltd company is not only possible but can also offer several advantages for your business. Such as cost-effective financing, tax benefits, and flexibility. By understanding the requirements and various leasing options available, you can choose the most suitable agreement for your company’s needs. Keep in mind the factors to consider, such as budget, lease term, vehicle specifications, mileage allowance, and maintenance responsibilities. This will ensure a successful and beneficial leasing experience for your new business.

Partnering With a Business Van Finance Specialist

Business financing specialists such as the team at First Oak Capital can help you find the right business van finance for your new business. Get in touch with our team at 0800 066 3677 or get a quote to get started today!