Guide to investing in a van or playing it safe

Choosing a new van is easy: working out how you're going to afford it is the hard part. Times are certainly tough, but that rusting heap parked outside has no understanding of what a recession means. So how are you going to replace it? You've got two choices - buy or lease. And with thus easy guide, you'll soon know the best option for you…

The difference between buying and leasing

Buying is the method you're probably most familiar with: find the cash either stuffed away in your bank account (unlikely) or ask someone for a loan. And once paid for, the van is yours.

The alternative is leasing. When leasing a vehicle you never own it, you pay a monthly fee for the use of the van (though with some schemes you can pay a lump some at the end of the lease period - e.g. two years - to buy the vehicle outright).

The pros of buying a van

Buying is a good option for several reasons:

* It tends to offer the best value. When you're negotiating with cold, hard cash, you're in a good position to haggle down the price and get a great deal.

* If you've already got a van, you can trade it in and save even more on the purchase.

* You are not restricted to a mileage limit, often a pitfall of leasing a van.

* Most importantly, the van is yours. It's an asset, a part of your business and if you need to trade, sell or swap, you can do so whenever you want.

The pros of leasing a van

Leasing a van has a number of advantages, not least the fixed monthly cost:<

* It's best suited to those who like the idea of driving a new van every few years. At the end of the term you can simply return it and walk away, or opt to take out another new van on a fresh agreement.

* It's a good option for businesses that don't want to pay out maintenance costs when vans depreciate.

* Most lease packages also include maintenance and breakdown cover, which is easier on the savings. And if your van breaks down, the company fixes it - and the cost doesn't come out of your pocket!

* Lease companies usually offer a choice of a straight lease or a lease purchase, which gives you the option to buy the vehicle at the end of the term.
Decisions, decisions

But what's best for you? The most important factor is the cost.

Choose to buy and you're taking the financial hit as well as the responsibility of full ownership. It also means the depreciation, servicing and repair costs are all yours. But, if your finances are up to it, buying could save you money in the long run.

Leasing spreads the payments over time and you can forget about additional servicing costs.

Leasing also removes some of the risk associated with owning a business. Leased vans aren't counted as assets, therefore it can't be used to pay off debts should your business go under.

However, leasing companies often impose a mileage restriction, and if you exceed this mileage limit at the end of the lease term you could be hit with hefty charges.

So, should you sell or should you return?

Take a long, hard look at your balance sheet. If your business is prospering and you can afford to buy, perhaps that's the best option for you. Slightly unsure? Maybe leasing is the way to go.

Whichever option you choose, you'll need van insurance and for the best prices, search online using price comparison websites.

Compare van insurance quotes at http://www.confused.com