Commercial vans are vital business assets. Depending on your economic status, van leasing is the best financial option for businesses. It is a cost-effective alternative, and you can lease as many vans as you need.
So you need to lease a van, but how? Keep reading to find out.
A Simple Guide to Commercial Van Leasing
Here are the steps involved in commercial van leasing:
1. Select your van
This is the first stage in your commercial van leasing journey. Some of the factors to consider while choosing a commercial van include:
- Payload capacity: The weight a vehicle can carry in passengers and load.
- Storage capacity: The van’s space for passengers and cargo.
- Fuel economy: The distance the van can travel before needing to be refueled. The higher the fuel economy, the lower the amount of fuel it would require.
- Safety features: These include blind spot warnings, tire pressure monitors, rearview cameras, traction control, etc.
You should only select commercial vans that meet your business expectations. For instance, transit van leases are excellent for delivery businesses. If you are still undecided, you can contact a commercial vehicle salesperson to help find the van that matches your need.
2. Choose your lease package
There are two kinds of lease packages offered by lessors; closed and open-end leases.
A closed-end lease includes the vehicle’s depreciation costs and the annual mileage; it is usually between two to three years. This lease contract is excellent for personal leases but not ideal for commercial purposes, which typically require significant mileage.
Enter the open-end lease: this lease option is commonly used for commercial purposes due to the flexibility of the mileage. It offers a greater mileage allowance, and you don’t have to worry about how many miles you will cover in your commercial van. Under an open-end lease, the lessee must pay the difference between the van’s residual value and its market value.
Other items included in a lease package include maintenance and repair services and warranties.
3. Work out your financial plan
After choosing your lease package, the next step is to work out your financial plan with the finance company.
The lessor or finance company will request your financial information; this is known as a credit check. The information includes your credit history, the management account, bank statements covering three to six months, etc.
The lessor will use the details to determine the financial capacity of your business and whether you can make the requisite payments.
Suppose the business does not have established commercial credit, like in the case of new companies. In that case, the directors or owners of the business may be required to supply personal guarantees for the van lease. If the company fails to make the requisite payments, the lessor will hold you liable.
4. Make the necessary down payment
After the finance company approves your proposal, you can proceed to make your first down payment or initial deposit.
The higher your down payment, the lower the monthly payments. Deposits for commercial van leases are usually lower than those made when purchasing the vehicle outright.
Businesses with low capital outlay are expected to pay higher down payments. Once completed, you are free to take delivery of your commercial van. While some lessors offer direct delivery services, others may request you come to the dealership for your van.
5. Make the agreed monthly payment
Monthly payments under a lease are fixed amounts expected to be paid at the close of the month. The monthly payment is based on the total value of the van and the interest rates.
The fees are spread across the duration of the lease and are expected to be made at the end of the month.
Failure to make the monthly payment entitles the lessor to repossess the vehicle from you and recover any outstanding balance. However, some lessors can allow you to settle the total balance at the close of the lease.
Concluding Thoughts
Leasing a commercial van has various benefits like fixed monthly payments, flexible mileage, low down payments, and most importantly, lower depreciation risk at the close of the lease contract. The processes involved in leasing are straightforward.
With the steps discussed above, you can quickly lease any commercial van for all your business purposes.
