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Leasing: But You Don’t Own It?

When we talk about leasing car or vans, a common objection is “but I won’t own the vehicle”. And you’re right, you won’t own it, but how much of a problem would that be? We thought we’d look into what not owning a vehicle really means.

Vehicles lose value, fairly fast, and fairly significantly. If you own it, that’s a depreciating asset on your books.

When it comes to selling your car or van, not only do you know you’ll get a lot less than you paid, but you’ll also have the hassle to go with it. Whether it’s advertising the vehicle or arranging viewings and test drives, this could take up a lot of time.

If you lease a vehicle, all of that is the leasing company’s problem. You can just give the car back and put your feet up, without the hassle of trying to sell for a decent price.

And it’s not just the things you don’t have to put up with, there are additional benefits to leasing you may not always see if you own your vehicle.

  • Account Management
  • Fixed monthly payments
  • Discounts leasing companies get from manufacturers
  • Brand new vehicle
  • Maintenance and insurance options

So maybe not owning your vehicle isn’t sounding so terrible, but how does this work in practice?

 

“All I have to do is put fuel in the vans”

Swindon-based businessman, Dave Ranford, had been a depot manager for CityLink for many years when he took the step of setting up his own mail delivery business nine years ago.

In the past nine years, he has been through every business life stage. As a startup operation, he drove the routes himself as well as handling all of the admin, finances, and sales.

At one point, his business grew dramatically, when he contracted both to UK Mail and DHL and the fleet increased to 16 vans. He then scaled it back.

Dave Ranford said, “work-life balance is really important for me. Quality of life matters. I have now scaled the business to ensure that it works for my employees, my customers and myself.”

The business now operates seven vehicles with five drivers across five routes. All the routes are Swindon based and the majority of the work is franchised with UK Mail on a four-year rolling basis.

The vehicles are regularly replaced, and recently, Dave made the decision to switch to leasing instead of rental when acquiring three new Renault Masters vans.

I started by myself with one van, doing all of the driving. I’ve always rented vehicles on a long-term basis, and I also own four of my own vehicles. This is the first time that I have leased vehicles. I decided to lease because the rental contracts were changing and the cost was increasing, and by coincidence, Arval was offering a good package to owner drivers through UK Mail.

Dave Ranford Business owner

The three vans will be used for delivery and were provided with the full UK Mail specifications ready to go from day one including the correct livery.

Dave found a contract that worked for him, rolling all of the running costs into one monthly rental, including road tax, maintenance, servicing and even the insurance.

Even with all of the running costs included, Dave said the cost of leasing the vehicle was around half the cost of rental.

“All I have to do is put fuel in the vans. Everything else is taken care of and even so, the cost has almost halved from the rental vehicles. The rental vehicles were very flexible, as I could hand them back in a month, whereas the leases run for three years. Now that I’ve been running the routes for nine years, I know the business and I know that if my drivers and I provide a good service, I can be confident of the next three years, even if things change.”

Leasing has also enabled Dave to shift the responsibility for managing the vehicles to Arval so he can focus on the business. “In my business, customer service is key. Delivering parcels sounds easy, but it is a highly pressured environment. You have to get it right first time.

“Leasing has helped me to lower transport costs, reduced the hassle and admin of operating vehicles and given me peace of mind as I know the vans are new and being properly maintained by experts.”

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Arval are a UK leasing and fleet management company providing cars and vans to individuals, small and large businesses. Read their guidance around leasing and buying business vehicles or go to their website to see what vehicles you could lease for your business.

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