Van Leasing Explained

Van leasing is an agreement between an individual or business and a van leasing company. This agreement allows that individual or business to rent a vehicle for an agreed period for fixed monthly payments - usually two to five years.

You won’t own the van you lease and at the end of the term you just simply return the van. As you don’t own the van, it often gives you access to brand new vans at lower prices. Van leasing also means that you don’t have to worry about depreciation over time or road tax (that’s the responsibility of the van leasing company!) A leased van is brand new and under warranty for most, if not the entire duration, of the contract. There’s also the option of rolling maintenance costs into your monthly payments too, making a contract hire agreement accessible for many.

Van leasing is a great option if you want to change your vehicle on a regular basis, normally for a new vehicle each time.


To lease a vehicle means that you agree to pay a sum of money to rent the said vehicle for an agreed amount of time, be it a car or light commercial vehicle (LCV) including vans and pickup trucks. The finance company owns the vehicle and the applicant is the registered keeper. Van leasing's formal name is contract hire and can come in two forms - personal contract hire (PCH) and business contract hire (BCH). Contract hire can often be confused with hire purchase (HP), car hire and personal contract purchase (PCP) but there are some key differences. 


An easy way to look at van leasing is to look at the different types of home ownership and renting types. Personal contract purchase is like a rent to buy scheme, hire purchase is like taking out a mortgage and finally car leasing is like renting a house. The biggest difference between the three options is the financial structure itself and ownership of the vehicle. Here we'll explain these two significant differences.


Finance structure

Van leasing's financial structure is perhaps the most confusing at first glance when compared to PCP or HP. At the start of the agreement will be an initial payment which will typically be 3, 6, 9 or 12 times the monthly payment, with All Van Leasing you can also choose a specific amount that you would like to use as an initial payment. A higher initial payment will result in lower monthly payments. This is not a deposit the initial payment is not returned to the leaser once the car has been returned. 


An example would be if you chose a 3 year deal for £100 a month with a 6 initial payment then your initial payment will be £600 and then the next 35 months payments will be £100. 



Perhaps the easiest feature of car leasing to understand is the ownership aspect. With car leasing, you do not own the car. The car is purchased on your behalf by the chosen finance company and you are simply renting the vehicle for the agreed period. You will be recognised as the registered keeper when applying for vehicle insurance. However, this doesn't mean you are free to treat the van badly or not treat it as if it's your own van. Finance companies keep a fair, wear and tear policy which by accepting the delivery you agree to at the beginning of the lease. 


Not owning the vehicle may at this point raise some alarm bells - there are pros and cons to it which we'll discuss here. 


Owning a vehicle means you are 100% responsible for it if something goes wrong. When the finance company owns it, it is theirs - this means that if the car fails or there is something mechanically wrong with it that wasn't caused by yourself directly then it's up to them to resolve it. Secondly, all vehicles leased by All Van Leasing are new and come with the manufacturer's standard warranty giving you peace of mind if something needs fixing. Please refer to the manufacturer's warranty document for exact details of what your warranty will potentially cover.  


Features of van leasing

Here is a list of some key features of what a car leasing agreement involves- 


No deposit

With a lease agreement, there is no deposit to pay most of the time. The deposit is replaced by an initial payment which is paid usually after the vehicle has been delivered


Long-term hire

Van leasing agreements usually last for 2, 3, 4 or 5 years which typically means the vehicle will almost always be within warranty. If you have chosen a 4 or 5 year agreement, you need to consider the warranty implications - do I extend the warranty?


You set the mileage

A lease agreement is on the basis of how long you want it for, how much initial payment you want to pay and how many miles you drive in a year. The finance company calculate the cost of the car based on these. As with any vehicle the more miles you drive a year the faster the car will depreciate this is the same with a lease higher annual mileage will increase your overall lease cost.


No interest

Unlike some PCP and HP deals, van leasing deals do not have any interest added to the deal. This may be of particular interest to followers of Islam and other faiths who are forbidden from paying interest. 


Fixed monthly payments

The monthly payments that are set at the beginning of the agreement will never change for the duration of the agreement helping applicants budget wisely for the next 2, 3, 4 or 5 years.


What is All Van Leasing's role?

Here at All Van Leasing, we are a credit broker and not a lender. This means that we bring the customer (you or the business), the vehicle and the finance company together. We use all of our experience to find the best deals available paired with the best finance company for the ultimate deal. Many of these deals can be seen on our special offers page.