Your Guide to Van Contract Hire and Leasing in the UK

We know how important it is to get the right van for the job. But, we also know just how overwhelming it can be to choose the right vehicle. With so many different options available, it's easy to develop a headache and get lost with it all. 

That's why we've put together this short but concise guide to van contract hire and leasing. We'll help you to understand the important information so you can make the best decision possible. 

How Does Van Leasing Work?  

Let's start with the basics. 

Van leasing is a long term rental agreement that offers you the exclusive use of a particular van for a set period. For example, you may pay £X amount per month for a Ford Transit over 48 months. You get a great van, and you get to spread the cost over time. 

Once your contract starts, you will be asked to pay an initial deposit. The deposit is typically 1 , 3 , 6 ,9 or 12 months of the rental fee. For example, if you choose to pay a 3-month deposit and your monthly rental fee is £200, you will pay a £600 deposit (3 x £200)—the higher your initial deposit, the lower your monthly repayment fee.

At the end of your van leasing period, you give the van back to the leasing company with zero obligations. You then have the choice to lease another new van or simply walk away. Some leasing companies may offer you a brand new van, and if you're happy with the offer, another contract begins.

Why Lease a Van? 

Leasing a van has become extremely popular in the UK with everyone from sole traders to large national limited companies. Why?  

  • It’s a cheaper solution than buying a van outright.
  • You can spread the costs over a long period.
  • The fixed monthly fee helps with budgeting.
  • Get the latest van and in-van technology every two-five years.
  • Drive under the manufacturer's warranty.
  • Road tax is included for the duration of the lease.
  • Maintenance is handled by the leasing company (only if you opt for a maintenance package).
  • You don't have to worry about losing money on depreciation.
  • All responsibility lies with the leasing company.

All the above makes leasing a van an attractive deal that is hard to turn down. Sole traders who lack the cash to splash out on a brand new van can benefit the most from a van leasing deal. They get access to the latest vans, which helps them keep up with competitors. 

Things to Consider Before Leasing a Van

While the benefits above are attractive, there are some things to consider before putting pen to paper.  

  • If you need to terminate the contract early, it can be expensive to do so. Make sure you can keep up the payments long term.
  • The monthly cost you pay is based on mileage. Exceed the annual mileage limit, and you will get charged per mile (most leasing companies will allow you to amend your limit during the contract). 
  • You must return the van you lease in good condition — you'll be charged extra if it is not. Check the BVRLA Fair Wear and Tear guidelines before leasing.
  • You must insure the van under a fully comprehensive plan.
  • You won't ever own the vehicle, and you cannot buy it at the end of your contract.

How Is Business Van Leasing Different from Personal Van Leasing? 

If you're a sole trader, partnership or limited company, you should be able to get a business lease for your new van(s). A business lease is beneficial as it may offer you positive tax incentives, a cheaper monthly rental fee, plus exclusive extras such as outsourced fleet management. And, of course, your business lease excludes VAT.

The Types of Business Van Leasing Contracts

Business Contract Hire

Also known as just BCH, Business Contract Hire is the most popular type of vehicle leasing contract. It's pretty straightforward. You pay the deposit on the van, followed by the monthly payments over the period, and then hand the van back at the end of the contract. There is usually an option to include maintenance, servicing and tyre packages into the monthly rentals.

Business Contract Purchase

Business Contract Purchase (BCP) is only available to VAT registered companies that wish to own their vans but avoid the issue of depreciating assets. A BCP involves you purchasing the vehicle but spreading the full cost over a set time. At the end of the contract, you will own the van outright.

Business Lease Purchase

A Business Lease Purchase is much like a BCH, but you'll get the opportunity to buy the van for a lump sum of money at the end of the contract. However, the contract rarely includes maintenance or other benefits. This is a good option for those unsure if they want to own the van or not at the end of their contract. 

Personal Van Leasing

If you're an individual, rather than a company or business, but in need of a van, you can opt for a personal van leasing deal. The contracts are the same as above, with personal contract hire being the most popular, but you won't benefit from zero VAT or other value-added benefits for business customers.


A personal van leasing contract may be useful for any sole trader, partnership or limited business less than one-year-old. Just remember that the person on the contract will be personally responsible for the vehicle's payments and care. 

Buying a Van vs Leasing 

If you have the cash to buy a new van outright, you may be thinking that the best option is to buy. Unfortunately, it's not as simple as that, and a finance option may be a better idea. 

Buying a Van

Pros of Buying a Van

  • You own it. It's yours.
  • No restrictions on mileage. You're free to drive as much as you want.
  • Modify your van as much as you like.
  • No monthly payments to deal with.
  • You can claim capital allowances.

Cons of Buying a Van

  • High initial costs.
  • An average vehicle will lose around 10-40% of its value in the first year of its life.
  • You're responsible for all repairs, which can be costly.
  • Reselling a van is difficult.

Leasing a Van

Pros of Leasing a Van

  • Fixed monthly costs that help with budgeting.
  • Drive the latest van and upgrade to a new van at the end of each contract.
  • No worries about depreciation.
  • Buy a maintenance package from the leasing company, and don't worry about costly repairs.
  • None of the usual risks that come with vehicle ownership.

Cons of Leasing a Van

  • Too much wear and tear, and you may get charged for it.
  • You will never own the van. 
  • You are limited by the number of miles you can put on the vehicle.
  • If you modify the van, you must remove modifications before handing the van back.

The Verdict

The decision to buy or lease a van is dependent on your personal preferences. However, the current depreciation of vehicles is enough to make leasing a van the best choice for most people. As a sole trader or business, the concept of always having new and updated vans is a serious bonus as it keeps them on the road and competitive. 

Van Wear and Tear Guidelines

By now, you are probably interested in leasing a van. One of the biggest concerns for many prospective van leasing customers is wear and tear. Your van is bound to pick up a few injuries during its time on the road, and leasing companies understand this. 

You can view a copy of the official Fair Wear and Tear Guidelines on the BVRLA website. The guidelines are the same for personal and business leasing but differ depending on the vehicle. There are three different sets of guidelines for cars, LCVs and HGVs.

Who's Eligible for Van Leasing? 

Personal Customers

Individuals will need to provide their personal details, address details for the past five years, employment details for the last three years, their bank details and their monthly income and expenditure.

A credit check will be carried out, and they may need to provide further information should the finance company require them to get you approved.

Business Customers

Sole traders, partnerships, limited companies or an LLP will need to fill out a Business Finance Application before getting accepted. You will need to provide details of your company, the director and business bank details. A credit check will be done on the person applying or, for limited companies, the directors.

You may also need to provide three months of business bank statements, management accounts and a director's guarantee. 

Kardi Leasing is a specialist provider of van contract hire and leasing deals. We can get business customers a brand new van on the road in no time. Get started today by browsing our website for the van you want and then contact us for a custom quote, or call 01908 10 60 80.