Self Employment & Vans..

[WelshWood]

Hi guys,

Apologies if this is in the wrong forum, but seemed the most appropriate.

To cut a story short, In the next coming weeks, i'm taking the plunge and going self employed (been meaning too for the past few years).

Anyways, as 'luck' would have it, my current van has failed the MOT and it just isn't worth putting the money into anymore.

Thus, I am looking for a new van, my dilemma now though, is do I lease, or do I buy a second hand one outright?

What have you guys done in the past when starting out and what do you see as the pros and cons of each option?

Many thanks in advance,

~WW

 

[Kev]

I'm not in the trade ... but I have been in business for a while.

Firstly, if you find an excellent second hand vehicle at a bargain price - that's a saving, pure and simple.

I'm in Oz and I don't know what financing is like over there ... can you easily get a lease on a good second hand vehicle?

Warranty and reliability are obviously factors, but that can be more of a brand/model question than anything.

Business image is important and signage on a crap vehicle is a turn off!

You want to keep your fixed outgoings on a monthly basis low and working for yourself you're going to be coming to grips with other people's cashflow problems (you need a buffer, so don't spend it all on a van).

You're going to get lots of opinions from the FOG [wink]

 

[andyman]

Both have plus and negative
Lease new van reliable fuel efficient low running cost
Negative. hand back after lease any damage will cost you. Still have to pay if work quiet

Buy. Never sure if you have a good one running costs increased mot
Plus scratches etc won't cost you unless you wamt. Van is yours to do what you want.

 

[Kylec57]

I ask myself this question a lot and I can't figure it out even with everyone's input. I'm self employed and I own a second hand van I bought outright (08 plate transit) I'm fortunate enough to be able to pay for anything she needs, example last months mot was £1000 but fingers crossed that will be it for a while. Insurance £90 per month (I'm 25 years old)and road tax is all I got to pay really. Where as A new van looks good and you have the safety of not paying a whole lot if any to keep it on the road plus you'll write a lot of cost off when you do your tax return, all for a monthly premium. In short I don't have a clue what's the best option and I look forward to everyone's input also.

 

[Wuffles]

I ask myself this question a lot and I can't figure it out even with everyone's input. I'm self employed and I own a second hand van I bought outright (08 plate transit) I'm fortunate enough to be able to pay for anything she needs, example last months mot was £1000 but fingers crossed that will be it for a while. Insurance £90 per month (I'm 25 years old)and road tax is all I got to pay really. Where as A new van looks good and you have the safety of not paying a whole lot if any to keep it on the road plus you'll write a lot of cost off when you do your tax return, all for a monthly premium. In short I don't have a clue what's the best option and I look forward to everyone's input also.

£90 per month?! Wow. I'm guessing you shopped around.

 

[Kylec57]

Sp10's are bad for your insurance lol oops just remembered the car and van are on a multi policy so slightly less than 90

 

[Locks14]

If you can afford to lease a new van then lease do so.

By the time you have to MOT, service, maintain and account for depreciation on a secondhand van it costs you just as much as leasing a new one, but with none of the benefits of a brand new vehicle with a warranty.

 

[peter halle]

I can't answer your question directly because I live over here on the wrong side of the pond from you.  But because I am self employed over here and just bought a van I will offer thoughts that might apply to you but also to those on this side of the Atlantic:

1.  Leasing allows you generally lower monthly out of pocket costs and generally those payments are considered an expense rather than dealing with depreciation for tax purposes.

2.  If you drive more than 12,000 miles a year a lease might end up with surcharges that surprise you at the end.  You should check with a financial guy / girl but usually those are also expenses.

3.  If you plan on keeping the vehicle for longer than payment period then buying usually is a better option.

4.  Look into any tax benefits for investing / buying versus leasing.  Here in the US we have tax code section 179 which basically, and really needs review with a qualified professional, that allows businesses to purchase assets up to a certain threshold and tax them as expenses (really deducting accelerated depreciation) and may really benefit you in a certain year.  Unfortunately when you sell the item you need to account for any undue benefits. 

Because I tend to keep tools, vehicles, etc. long past the published depression periods I have found the section 179 deduction well worth investigating in my world.

Sorry to take this on a tangent for other new to self employment where you are, but you should investigate what the tax options might be also.

Peter

 

[Wuffles]

If you can afford to lease a new van then lease do so.

By the time you have to MOT, service, maintain and account for depreciation on a secondhand van it costs you just as much as leasing a new one, but with none of the benefits of a brand new vehicle with a warranty.

Well, not always.

Bought a 2008 T5 LWB 130 panel van for £10.5k in 2013 with 60k miles, run for a year and a half with one service of £120, sold for £10k within a day of advertising with 72k miles.

Am currently in a 2013 T5 Kombi I bought from a guy who had dented the rear and just wanted rid after 9 months of ownership. I had it repaired by a local paint shop for £500 and the value has increased by £6k from what I bought it at. I am looking to sell this in a year or so (after 2 years ownership) and pretty much break even on what I paid.

I've probably been lucky.

 

[joiner1970]

Same here .

I've had a t5 from new before that I had a t4 for 7 years bought for £10500 of my hard earned savings. I sold it with 43,000 on the clock for just over £4k. So 7 years cost me around £6k plus mot s , servicing etc which wouldn't have been much. So way less than leasing would have cost me.

 

[w802h]

The vehicle you drive is in part a reflection of you.  20 yrs ago the first carpenter I worked for drove a bright yellow POS truck.  The bed was rusted out and he rebuilt it with saddle joint cut cedar logs.  It was the best advertising and conversation piece he could have had for his custom log cabin business in a very rural part of Downeast Maine. 

For some people an old beat up truck says "I'm thifty" or "I pay attention to costs," for others it says "I'm sloppy."

A new truck can give an impression of "having one's act together" or negatively as "expensive."

I've always bought nice, used vehicles and held onto them as long as I could - maybe too long.  Financially, it's what makes sense for me, and my image.

 

[richy3333]

Years ago when I first started I bought used vehicles because that's all I could afford to get me going. I now lease purchase my vans. You need to remember that you are now a business. Your first call should be to your accountant to discuss the pros and cons of all options. There's never really a right or wrong thing to do, just what's best for your business at this time.

With new vans I've always had VW's as I need reliability. My last van went back at 4 years old with only 30000 miles and one service. Excluding fuel and monthly payments my only cost was winter tyres and a service. It's replacement was messed up by the garage deciding to drill more holes in the floor than a colander! To their credit VW have been great and my new T6 to replace the T5 is being built this week (thus all happened before the VW debacle).

Customers are now very savvy. If you can't set the right impression with your vehicle when you pull on to their drives at the moment do it with how you present yourself. - attitude and clothing/presentation etc.

 

[Doug S]

I needed a new van a year ago and didn't know if to buy or lease. Ended up buying a tidy 07 plate, I don't do many miles and it does all I need. I like to own things and lease payments soon add up.

There have been one or two "tradesmen" round here in their brand new leased vans, fully sign written with what they say they can do, normally everything from cleaning gutters to extensions, no job too small, free estimates etc. They are normally just a handyman really. I think customers are starting to see through this and prefer someone more genuine, an older vehicle is ok as long as you keep things clean and tidy.

 

[Andy UK]

"Pre-registered" new vans are worth a look as you can make a substantial saving over "Brand New".
I bought a 3 month old pre-registered van with 75 miles on the clock 2 years ago and saved more than £3000 on the brand new list price.
I had second hand vans previously and found that reliability can be an issue and ends up costing you more than just garage bills.
Also buying a second hand van can be risky as there are plenty of real lemons out there.
I looked into leasing but found that the cost over 3 years was nearly what it would cost me to buy and I would having nothing left at the end of it because the van would be handed back.
The lease deals I looked at were not fully inclusive so I would still be responsible for servicing costs, tyres, brakes etc. plus excess costs for going over mileage or chips, scratches, dents to bodywork etc.
Really you need to weigh up the pro's and con's and decide which is best for you. 

 

[Timtool]

What i have always done was buy a model that was 4-5 years old under 80.000 km and still in production or recently replaced. Those usually go for half the price of new and nobody can actually tell whether you bought new or used. Those have also been maintained in official dealer garage's because of the warranty.

I do all the maintenance myself, takes half a day a year and costs next to nothing. Vehicles that never go to a garage also don't have the tendency to suddenly break down days after being in the hand of a mechanic who's livelihood depends on how often your vehicle breaks down... My parents always went to this local garage, payed insane amounts for service and were guaranteed to have sudden problems within two weeks.

Also choose the right brand and model, i happen to have a pick up truck as i also need it for the farm. My previous was a '99 Nissan kingcab, very reliable drove it for 7 years and only replaced the starter (normal at 200.000km). As a follow up i didn't pick Nissan again because the following models had reliability problems (another advantage of buying used is feedback from those who bought it new). I went for the most reliable thing available that you could easily maintain yourself which is a Isuzu D-max from 2007. The last model of that type so all the eventual baby problems had been worked out. Maintenance costs me about €50 a year for oil and filters and i use the "MOT" as a diagnose that tells me what i need to look at.

I'm reluctant to buy new, the second you sign the contract it instantly loses 10-20% of it's value, and 50% after the warranty is over. You may think the warranty is a good thing and these days you get 5-7 years on anything but to me it feels like a trap. You are forced to have it serviced in an authorized dealership at their fixed prices for the whole duration of the warranty, works for most people who aren't into mechanical stuff but financially you lose big time. Talking in thousands over the duration of the warranty.

 

[R.W_Carpentry]

Sp10's are bad for your insurance lol oops just remembered the car and van are on a multi policy so slightly less than 90

As already said I'm sure you shopped around for your insurance, but same age, same van, also 6points on a sp10 and I'm paying £40 a month, obviously location and degree of cover affect things though.

As for OP, I'd always opt for a decent second hand or new if you can afford it bought outright, vans tend to hold value well if looked after and long term may be cheaper than leasing, plenty of tidy vans out there that will look just as smart as a new on lease.
You obviously take the gamble on repair costs though, I've just had a new gearbox in mine that set me back £1500, but in the 4 years I've had the van I've not had anything else done other than normal servicing. Personally I find the inconvenience of repair work a lot worse than the financial issues, if I had a lease and something went wrong, I'm still without a van, I may not have to pay for the repair but I'm out of work all the same.

 

[sancho57]

Though Im not in business I always buy new.

Why?

Because , Im not inheriting someone else problems.

I know everything about the vehicle from the get go.

I keep the maintenance on it and make sure its being done.

That it hasn't been abused, in accidents etc.

My last truck was 2001 Dodge 1500 sold it in 2013 before I came over here it had 89K on it and ran like a charm.

My Honda Accord I bought new in 1990 sold it in 2010 has 298K on it and passed Calif smog beef I sold it.

I hold on to my vehicles,  ensure the maintenance is being performed IAW manufacturers specs.  I get no surprises from things I knew nothing about.

I feel I get more then my moneys worth out of them.

 

[rst]

My company buys used rental company vans...always 3/4 ton Fords, and I've retired four with 250,00 miles and my present van has 213,00.  When we bought it there was 21,000 on the odometer, we paid $18,000 for it and the original window sticker in the boot said the list had been $23,000.

 

[harry_]

Vehicle advice is a funny thing, worth about what it costs to get.

My own research tells me that leasing is a bad option,....for me. My mileage is simply way too high. I would get killed with overage charges.
I chose new for a number of reasons. First being lifetime purchase cost. The math told me that buying used with the options desired, when financed at a used vehicle rate would have the same overall cost as buying new at the significantly less new vehicle rate.

As for used...
I have done that too. That was the truck that was retired for this one. A 1998 Dodge 1500 2WD. When I purchased it in the spring of 2007 for $3500, it was nothing more than "just a truck". Fates had it that I would put it into service professionally only a few months later. Before it gave up the ghost in January of this year, I had put on 200,000 miles on it on top of the 88,000 miles it already had on it. Never had repairs in a single year over $600.

Having done a rough costing analysis between the old and the new, regular maintenance excluded, the old one cost me annually less than what amounts to 2 payments on the new one.

but....

1). Damn, I love my new truck.
2). I no longer have to pay $40 a throw to a plow guy doing a lousy job on my driveway.
3). I have a decent warranty to cover most of the big things for a few more years.

 

[JeremyH.]

Insurance £90 per month (I'm 25 years old)

Rape!

My car insurance is £23. No it's not good, but good insurance would still only be like maybe £45. (adjusted for conversion of currencies)

Read reviews on vehicles if buying used, specific years, check if they're reliable. Also check how much replacement drive-trains are. I have no idea what you make for money, so I can't say if any of this is a good idea; nor do I know how good you are.