Van leasing vs buying outright

By the FleetMe team · Updated 14 October 2026 · 9 min read

The short answer

Leasing turns a van into a fixed monthly cost and hands the resale risk to us. Buying makes the van yours and the depreciation yours. Buying wins on a van you keep a long time and work lightly; leasing wins on almost everything else.

The real question is who carries the depreciation

Both routes put the same van on your drive. What differs is who is holding it the day it is worth less than you hoped.

Buy it and the depreciation is yours. You paid the money, the van is an asset in your accounts, and whatever it fetches in five years is what you get. Lease it and the depreciation is ours: we price a rental against what we expect the van to be worth when it comes back, and if we get that wrong, that is our problem rather than yours.

Everything else in this comparison follows from that one difference. Cash, tax, flexibility, the argument you have at the end, all of it is downstream.

What each one does to your cash

Buying takes a large amount of money out of the business at once, or takes on borrowing that shows as a liability. What you get for it is an asset you own outright and no monthly commitment once it is paid for.

Leasing takes an initial rental and then a fixed monthly figure for an agreed term. The money leaves slowly and predictably, which is easier to plan around and leaves working capital in the business for the things that actually earn, stock, tools, wages, the next van.

Neither is cheaper in the abstract. A van bought and kept for a decade will usually cost less in total than leasing the same van three times over. A van bought and sold at four years, in a soft used market, frequently costs more.

Side by side

	Contract hire	Buying outright
Who owns it	FleetMe, throughout	Your business
Up-front cost	An initial rental, typically a multiple of the monthly	The full price, or a deposit plus borrowing
Monthly cost	Fixed for the whole term	None once paid for; loan repayments if financed
Resale risk	Ours	Yours
At the end	Hand it back	Keep it, sell it or run it on
Maintenance	Optional package, fixed monthly	Yours, whenever it happens
Mileage	Agreed up front, charged over	Unlimited
Modifications	Restricted; return it as it was	Yours to do as you like
Accounting	An operating expense	A capital asset, written down over time
Best when	You want a fixed cost and a new van every few years	You keep vehicles a long time and work them lightly

The tax treatment is genuinely different

This is where a conversation with your accountant earns its fee, because the two routes are taxed in different ways rather than at different rates.

Leasing. Rentals are an operating cost, so they are deducted against profits in the period you pay them. On a commercial vehicle used for business, the VAT on the rentals is generally reclaimable in full, see HMRC's VAT on motoring expenses (Notice 700/64). Cars are treated far less generously, which is why the van and car answers diverge.

Buying. The van is a capital asset, so relief comes through capital allowances rather than as a straight deduction. Commercial vehicles generally qualify for the annual investment allowance, which can bring a large part of the relief forward into the year of purchase, useful in a profitable year, less so in a lean one.

Both are legitimate. Which suits you depends on your profit position and your cash, and that is your accountant's call, not ours.

When buying genuinely wins

You keep vehicles until they stop. If your last van went to 200,000 miles and twelve years, leasing was never going to beat that. The whole economics of a lease assume you hand it back with life left in it.

Your mileage is low and unpredictable. A lease is priced against an agreed mileage. If yours swings wildly and sits low on average, you are paying for certainty you do not need.

The van needs permanent modification. A welded rack, a drilled-through conversion, a livery that will not come off, anything you cannot undo sits badly with a vehicle you have to return in a defined condition.

You have cash doing nothing. If the money is sitting in the business earning very little, spending it on a tool that earns is a reasonable decision.

When leasing genuinely wins

You want a known cost. A fixed monthly rental, a fixed term and an optional maintenance package turn a van from a variable cost into a line in the forecast. For a business pricing jobs, that is worth real money.

You want to stay in newer vehicles. Newer means fewer breakdowns, better emissions compliance and a van that says something about the business when it parks outside a customer's house.

Your cash is better used elsewhere. Most businesses earn more from working capital than they save by owning a depreciating asset.

You do not want to sell it. Disposing of a used van is a job: adverts, timewasters, haggling, and a price set by a market you do not control. Handing the keys back is not.

The mistake made in both directions

Buying because the monthly figure looks smaller. It usually does, because a loan repayment is not the same thing as a rental, one leaves you holding an asset that is losing value, the other does not. Compare the whole cost over the period you will actually keep the van, including what you think it will fetch, not the two monthly numbers.

Leasing on a mileage you know is optimistic. Understating mileage to get a lower rental is borrowing from your future self at a poor rate. Excess mileage is charged, and the charge is not a punishment, it is the resale value you used up. Quote the mileage you will actually do.

How to decide in ten minutes

Answer three questions honestly.

How long will you keep it? Under five years leans to leasing. Ten years or more leans hard to buying.

What is the mileage, really? Look at last year's figure rather than the one in your head.

What else could the cash do? If it would otherwise sit in the account, buying is defensible. If it would buy stock, tools or an extra pair of hands, it probably should.

If it comes out close, it is close, and either answer is fine. We will tell you when it is close rather than pretend a lease is obviously right.

FAQs

Is leasing a van cheaper than buying one?

Not inherently. Over a short holding period leasing is often cheaper in total because you never absorb the steepest depreciation. Over a long one, keeping a van a decade, buying is usually cheaper, because you stop paying for it and keep using it.

Can I buy the van at the end of a contract hire agreement?

No. Contract hire is a rental: the vehicle goes back at the end and ownership never passes to you. If owning the van at the end matters, hire purchase or a finance lease is the route to look at instead.

Does leasing a van affect my credit or borrowing?

A lease is a commitment and an underwriter will see it, in the same way a loan would. What it does not do is consume a lump of cash or sit on the balance sheet the way a purchased asset and its borrowing do. Your accountant can tell you how it presents in your accounts.

What happens if my mileage changes mid-agreement?

Tell us early. A mid-term mileage amendment is often possible, the figure is adjusted and the rental re-rated for the remainder, which spreads the cost rather than landing it as an excess charge at the end.

Can I reclaim the VAT either way?

On a commercial vehicle used for business, VAT on lease rentals is generally reclaimable in full, and VAT on a purchase is generally reclaimable too. Cars are treated very differently. Check your own position against HMRC Notice 700/64 and with your accountant.

Next step

Business van leasing →

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Business van leasing eligibility →

The honest answer on who gets considered, and what we look at when we assess a business.

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