Should You Buy or Lease Your Second Van? The Real 2026 Numbers

You need a second van. Business is growing, you've hired a tech, and they can't keep using their personal car. You're looking at £25,000 for a decent used Transit.

Do you buy it outright? Hire purchase? Lease? Everyone tells you something different. The van salesman pushes leasing. Your accountant says buy. Your mate says hire purchase.

This guide breaks down the real numbers—total cost, cash flow impact, tax treatment, and when each option makes sense for your business.

The Decision Framework (Start Here)

The "best" option depends on three factors:

Option 1: Buying Outright (Cash Purchase)

How It Works

• Pay £25,000 upfront
• You own the van immediately
• No monthly payments, no interest
• Keep it until it dies or sell it whenever

Total Cost Breakdown (4 Years)

Pros

• ✓ No interest payments
• ✓ You own the asset
• ✓ No mileage restrictions
• ✓ Can sell anytime if you need cash
• ✓ Cheapest long-term option

Cons

• ✗ £25,000 upfront cash hit
• ✗ Depreciation risk (if van value crashes)
• ✗ Responsible for repairs and maintenance forever
• ✗ Ties up working capital

Option 2: Hire Purchase (HP)

How It Works

• Deposit: £5,000 (20%)
• Borrow: £20,000 over 4 years
• Monthly payment: £450-500 (depends on APR)
• At end: You own the van

Total Cost Breakdown (4 Years, 8% APR)

Pros

• ✓ Lower upfront cost (just deposit)
• ✓ You own it at the end
• ✓ Fixed monthly payments (budgetable)
• ✓ Interest is tax-deductible

Cons

• ✗ More expensive than buying outright (£2,800 extra in interest)
• ✗ Lender owns van until final payment
• ✗ Can't sell without paying off loan first
• ✗ Depreciation risk still yours

Option 3: Leasing (Contract Hire)

How It Works

• Deposit: £1,500-3,000
• Monthly payment: £320-380
• Contract: 3-4 years, 10,000 miles/year limit
• At end: Hand van back, no ownership

Total Cost Breakdown (4 Years)

Pros

• ✓ Lowest monthly payments
• ✓ Minimal upfront cost
• ✓ No depreciation risk (their problem)
• ✓ Easy to upgrade every 3-4 years
• ✓ Predictable costs (maintenance sometimes included)

Cons

• ✗ Most expensive long-term (£18K spent, £0 asset)
• ✗ Never own the van
• ✗ Mileage restrictions (excess charges £0.05-0.15/mile)
• ✗ Damage charges on return
• ✗ Locked in for contract term (early termination fees £££)

Tax Implications (Critical for Decision)

How you finance the van changes how much tax you save. Here's what you can claim:

Buying Outright (Capital Allowances)

Hire Purchase (Interest + Capital Allowances)

Leasing (Full Deduction)

When to Buy (Outright or HP)

Choose buying if:

• ✓ You have cash available£25K sitting in business account earning 0.5% interest? Buy the van—better ROI.
• ✓ You keep vans 5+ yearsLong ownership = lowest total cost. Buying wins over leasing by £8K+.
• ✓ You do high mileage30,000+ miles/year? Lease excess charges will kill you. Own it instead.
• ✓ You want to build assetsVan on balance sheet = business equity. Helpful for loans or eventual sale.

When to Lease

Choose leasing if:

• ✓ Cash flow is tight£350/month easier to manage than £25K upfront or £475 HP payments.
• ✓ You want new vans every 3 yearsUpgrade cycle keeps van under warranty, avoids repair costs, maintains professional image.
• ✓ Mileage is predictable and low10K miles/year? You'll stay under limits. 15K+ and you're paying excess charges.
• ✓ You're testing business growthNot sure second van is permanent? Lease lets you exit after 3 years without selling.

The Bottom Line

Buying outright is cheapest long-term (£10K total cost). Hire purchase is middle ground (£12.8K). Leasing is most expensive (£18.35K + no asset) but easiest on cash flow.

If you have cash and keep vans 5+ years: buy outright. If cash is tight but you want ownership: hire purchase. If cash flow matters most and you upgrade often: lease.

Don't let the van salesman talk you into leasing "because the payments are lower." Run the 4-year total cost and decide based on YOUR business needs, not their commission.