When you’re operating in the heating and plumbing industry it’s essential to have a reliable vehicle so that you can arrive on time to your customers, and carry the tools of the trade.
Choosing a vehicle can be easy, but affording it and paying for it is a completely different challenge.
A vehicle is a large investment, and to buy one you’ll need to either pay for it outright or get a loan. A key benefit of doing either of these options is that the vehicle will then belong to you.
Alternatively, you could lease one. This means you’ll never own it but you’ll pay a monthly fee for using it. However, some schemes allow you to buy it when the lease period is over.
In addition, if you own a small to medium sized business, there are a few benefits you’ll receive. For example, leasing doesn’t require a big chunk of cash, as you’ll be able to spread the cost out over the term of your contract, and if anything goes wrong with the vehicle, the costs will be covered by the leasing company, to give you one less thing to worry about.
And, one of the tax advantages of leasing a van for business is that you can claim up to 100% VAT back on your monthly payments, if your business is VAT registered, and the van is for business use only.
Before you rush to your nearest vehicle leasing company, consider these top ten tips.
Key considerations when leasing a vehicle
1. Ensure the leasing company is a member of the BVRLA
Check that the broker you are dealing with is a member of the The British Vehicle Rental and Leasing Association (BVRLA), the trade association of the vehicle rental and leasing sector in the UK, which is the body that regulates the industry.
2. Consumer Credit Licence
Ask the broker if they hold a Consumer Credit Licence, as businesses that provide goods or services on credit need to be licensed by the Office of Fair Trading (OFT).
And, providing or arranging consumer credit without a licence is a criminal offence.
3. Documentation fees
Check that the quotation you’ve received doesn’t have any hidden documentation or admin fees, as it’s not uncommon to see lease deals advertised with £500 +VAT hidden fees which can dramatically affect your monthly payments.
4. Third party brokers
Ask the broker if they are associated directly with a leasing company.
Brokers with no associations are classed as third party brokers or “bedroom brokers”, and if you choose to go with them, your personal credit information could be passed around insecurely and used by businesses without a Consumer Credit Licence.
5. Payment Profile
A Contract Hire quote is calculated with a specific “Payment Profile” which sets out how many instalments you’ll need to make up front, and how many monthly instalments will follow.
6. Enhanced deposit
Similarly to the payment profile, an enhanced deposit will reduce your monthly payments.
But when you’re comparing quotations, ensure you check the initial rental or deposit is the equivalent to three monthly payments.
7. Unrealistic annual mileage
Finance types such as Contract Hire, Personal Contract Hire, Finance Lease, Lease Purchase, Contract Purchase and Personal Contract Purchase are all mileage sensitive.
If you’re considering this type of agreement it’s important to set the mileage per annum to your own usage, as if you underestimate your annual mileage you could face a hefty mileage fee at the end of your contract.
8. Road Fund Licence
Contract Hire agreements usually include Road Fund Licences for the duration of the agreement.
So, when you’re comparing quotations, check that the Road Fund Licence is included for the full term.
9. Data Protection
Check that the broker you’re dealing with is registered with the Data Protection Service and if they have a Data Protection certificate in place.
When you apply for any type of credit agreement you’ll have to provide sensitive information relating to your identification, your residence, your occupation and your bank details, so it’s crucial that the broker treats this information in a professional and secure manner.
10. Industry knowledge
It’s important to seek expert advice when considering financing a vehicle.
We’d recommend consulting CORGI Vans, which has more than 220 years’ combined industry experience ensuring tradespeople receive good, honest, informative advice.
And if you’d like to speak to a member of our team about this, simply get in touch by emailing firstname.lastname@example.org or call 020 3457 3703.