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Hi Guys, I need a new van as current one written off.  Would you recommend leasing a new for £250 per Month for five years   or buying a used van ?

I've only got about £2000

Thanks

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@P4dstar @Iron Giantboth leased vans. Both have bought their next one. They'll know the positives and negatives.

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19 minutes ago, Math said:

Hi Guys, I need a new van as current one written off.  Would you recommend leasing a new for £250 per Month for five years   or buying a used van ?

I've only got about £2000

Thanks

Buy 

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Buying is better long term but with £2K you are not going to get a decent van. Have you looked at Gov Bounce Back loans scheme? They might be a cheaper way to finance a van. 

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If your round is full/fullish it might be worth leasing, less likely to breakdown and lose a day or 2 fixing. if your round is not full and its easy to shift around work if the van were to breakdown, I would buy a cheap van while you build. a van for 2 grand is likely to be in and out the garage every few months I would think though

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Master Jedi Alejandro

When you say lease, do you mean Hire Purchase (HP)? That's what I've done. Pay the van up over 5 years but its mine at the end, they don't take it back. My last van I cleared the finance early and sold it private. You can even HP, but put cash aside so you can clear it after 2 years or so, if you wanted, to save on interest costs. 

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i think @Master Jedi Alejandro had asked a good question. There are so many variants that the o/p needs to understand what that finance deal means long term.

Years back Citroen offered contract hire and a finance lease. A finance lease could be purchased by the lessor at the end of the lease legally. Some offer that you can sell the vehicle to a third party and then tell you you can then purchase it back at a later time. But this isn't legal as the original leasor isn't allowed by finance legislation to own the vehicle are the lease is complete.

Beware of large balloon payments at the end of the contract. They are there to make the monthly payments more affordable but most have to hand the van back as they haven't the money for the amount outstanding.

Personally you have enough for a good deposit on a reasonably new van. I would choose hp or look around for another cheaper form of finance. Refer @ched999uk advice.

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Buy a van all day long, 2k is plenty of money for a good van that can last u for 10 years if your willing to look after and maintain it 😉

Look at a Ford Transit mk6s (2000-2006) plenty of these vans about.. thats how good they are. Find one thats been well looked after and hasnt been abused and it can be a good workhorse for u.

Good luck

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45 minutes ago, spruce said:

i think @Master Jedi Alejandro had asked a good question. There are so many variants that the o/p needs to understand what that finance deal means long term.

Years back Citroen offered contract hire and a finance lease. A finance lease could be purchased by the lessor at the end of the lease legally. Some offer that you can sell the vehicle to a third party and then tell you you can then purchase it back at a later time. But this isn't legal as the original leasor isn't allowed by finance legislation to own the vehicle are the lease is complete.

Beware of large balloon payments at the end of the contract. They are there to make the monthly payments more affordable but most have to hand the van back as they haven't the money for the amount outstanding.

Personally you have enough for a good deposit on a reasonably new van. I would choose hp or look around for another cheaper form of finance. Refer @ched999uk advice.

im gonna sell my van to my girlfriend next year when the 5 year contract comes to an end(business finance lease)for £7,500,pay the balloon which is £7k then buy it back off her a few weeks later.....

 

its not the cheapest way of owning my leased van..it will have cost me around £20k altogether but itll only have 17k on the clock and at least another 7 or 8 years of life left in it....

 

4 years ago my old vans oil pump went and seized my engine on the 4th jan...within a month i had a brand new van on my drive and didnt pay a penny for a month.....its an easy way of getting a new van if you dont want to shell out any money you have saved up.......

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11 minutes ago, dazmond said:

im gonna sell my van to my girlfriend next year when the 5 year contract comes to an end(business finance lease)for £7,500,pay the balloon which is £7k then buy it back off her a few weeks later.....

Legally, I don't think you can do that as you have already been offsetting the lease payments against your profits over the term of the lease you will then be looking to offset the purchase of the exact same van against your profits once again 3 weeks after you sold the van aka very dodgy 

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13 minutes ago, dazmond said:

im gonna sell my van to my girlfriend next year when the 5 year contract comes to an end(business finance lease)for £7,500,pay the balloon which is £7k then buy it back off her a few weeks later.....

While you can do that, it HMRC catch you you will receive a fine PLUS the tax you avoided by using a lease scheme. It wouldn't be a cheap van anymore!

Maybe you could lease it from your girlfriend at the market rate? Then she has to declare it as income! Best to consult an accountant to be safe.

Edited by ched999uk
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21 minutes ago, Iron Giant said:

Legally, I don't think you can do that as you have already been offsetting the lease payments against your profits over the term of the lease you will then be looking to offset the purchase of the exact same van against your profits once again 3 weeks after you sold the van aka very dodgy 

of course i can......as long as ive got a buyer for the van at the end of the lease it doesnt matter who i sell it to and me buying it back is just the same as me buying another second hand van after leasing a van for 5 years....

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Just now, dazmond said:

of course i can......as long as ive got a buyer for the van at the end of the lease it doesnt matter who i sell it to and me buying it back is just the same as me buying another second hand van after leasing a van for 5 years....

Seriously it is illegal. You are trying to avoid tax, simple. If you don't believe us ask your accountant!

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24 minutes ago, ched999uk said:

While you can do that, it HMRC catch you you will receive a fine PLUS the tax you avoided by using a lease scheme. It wouldn't be a cheap van anymore!

Maybe you could lease it from your girlfriend at the market rate? Then she has to declare it as income! Best to consult an accountant to be safe.

why cant i do that?its no different than buying a different second hand van after leasing a van for 5 years......

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im paying the VAT on the van so im not avoiding tax at all!im paying it on the rental payments every month and when i pay the balloon payment!

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4 minutes ago, dazmond said:

im paying the VAT on the van so im not avoiding tax at all!im paying it on the rental payments every month and when i pay the balloon payment!

It's nothing to do with Vat.

You are claiming 100% of the lease cost against your tax thus lowering your profits. If it were a Hire Purchase you couldn't claim all of the monthly costs against your tax liability. If you bought it new then you would only be able to offset a % of van purchase price per year and then depreciate the asset.... I am no accountant but I know it's not simple.

So by leasing and eventually owning the same vehicle in the end you will have paid less to HMRC than you would if you had bought the van any other way!

If someone known to you buys it then sells it to you technically you both are guilty of fraud as you have avoided paying some tax to HMRC.

I have no doubt some people do exactly as you are intending but it is illegal. 

I am not telling you what to do, obviously, just trying to inform you of the risk. 

 

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17 minutes ago, ched999uk said:

you bought it new then you would only be able to offset a % of van purchase price per year and then depreciate the asset.... I am no accountant but I know it's not simple.

You can write the full amount off in the first year or depreciate it at 18% per annum. The 18% is on current book value not on purchase price.

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7 minutes ago, dazmond said:

im quite sure ill be fine....we all bend the rules now and again dont we?🙂

There is a bit of a difference to bending the rules and committing fraud 😂😂😂 we will visit you in prison if lockdown is over by then 😂😂😂😂

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scottish cleaning service
5 hours ago, Math said:

Hi Guys, I need a new van as current one written off.  Would you recommend leasing a new for £250 per Month for five years   or buying a used van ?

I've only got about £2000

Thanks

If you have the work then buy on HP but if you are starting out I think I would lease so that I could hand it back if times are tough.

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11 hours ago, dazmond said:

why cant i do that?its no different than buying a different second hand van after leasing a van for 5 years......

According to mhrc you are wanting your cake and eat it too.

As per @ched999uk. If this is how you have been told to do it by the salesman then you have recourse. 

If you have a lease with the van initially registered in your name then that's no problem. If the van is registered in your finance house's name then what your plan is to sell it to your girl friend and buy it back a little later isn't legal.

You will have 7k at the end of the day you can't legally write off against tax as you need to account for the sale on your tax return.

If you asked an accountant to do it for you, he would put his career in jeopardy if he did it.

Yours is a typical example of a final balloon payment being more than the van is worth at the end of the lease. This is to 'pesuade' you to either sell it on or hand it back. Either way they are in a good position to offer you a new van on lease with heated seats and a heated front windscreen.

Leases don't normally work in the buyers favour, especially as sole traders. They were introduced by the motor trade for big business as the purchase and disposal of vehicles can become a real problem for them. It also assures the motor trade of a steady flow of new vehicle sales.

Sorry, but that's the truth.

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