3 Things to be aware of when leasing a van
When you lease a van or car there are a few things its worth being aware to make sure that your vehicle leasing experience goes as smooth as possible.
Maintenance packages
When you lease a van or car you are in effect hiring the van from the lease company until the fixed term of agreement ends. Most if not all lease agreements offer a maintenance package that can be bundles in with the lease agreement for an extra cost. This agreement ensures that any work that needs to be carried out on the van throughout the term of lease is covered under the package. If you don’t have a maintenance contract and there are no large repairs required throughout the lease agreement then you have saved the price of the maintenance package. If on the other hand you have a number of large bills the money you are forking out is pretty much dead money as it’s not your van and therefore any money spent on the vehicle won’t benefit your pocket when you come to part with it. Weighing up the potential bills that are may occur throughout the length of the lease term is something you need to consider seriously.
Balloon payments
Some leasing companies try to attract new customers by offering low monthly lease payments and then one large payment at the end of the lease agreement. This is what’s called a balloon payment and it can be anywhere between 0% and 80% of the resale value of the vehicle. You need to factor this into that total amount payable to the lease company and consider if the alternative of paying back the amount in small monthly payments over the lease term with no balloon payment is a better option for both your needs and finances.
Gap Insurance
When you lease a new van one of the first things you have to do is make sure that you have the right insurance to cover your new vehicle. Most people will take out fully comp insurance and consider the matter resolved because they feel that in the event of an accident the insurance company will pick up the tab. Although the insurance company will pay out the value of the van in the event of an accident or theft this doesn’t always wipe the slate clean so to speak. Let’s consider that once a new vehicle leaves the show room it automatically drops in value and the van you have just purchased is initially worth £20,000. Six months down the track the van is stolen and not recovered so you contact your insurance company who agrees to pay you the current market value for the van which has now depreciated to £14,000. Add this figure to the £2,000 you have paid back in monthly instalments over the 6 months and the total capital you have for the van is £16,000, which is £4,000 short from the original cost of the new van you leased and termed the gap. This is where gap insurance covers you, it will only usually cost a few pound extra on your insurance policy but can save you a lot of money in the long run should the worst happen.
