The £6.7billion Van Leasing Mistake

According to a survey commissioned by Lex Autolease, 77% of SMEs have never leased a van or any other vehicle before, and 54% of them say they don’t intend to in the future.

But according to the survey, which looked at 250 SME key decision makers, this could be a costly mistake.

With a new van costing around £16,448, small to medium sized businesses face a significant capital outlay every time they change their vehicle fleet - typically once every four years. As a result they miss out on growth opportunities because they have the equivalent of £6.7billion tied up in depreciating LCVs.

By contrast, leasing a van costs on average £817 for an initial upfront payment and £221 per month thereafter. This provides businesses with greater cashflow flexibility, not to mention regular access to new vehicles.

The survey also revealed how SMEs would invest the additional capital they saved if they leased vehicles rather than purchasing them:

• 15% would increase marketing activities
• 18% would use it to reduce their existing debt
• 28% would invest in new infrastructure
• 43% would use it to boost their working capital reserves

Tim Porter, MD of Lex Autolease said:“While larger businesses recognise the benefits of not saddling a depreciating asset on their balance sheet, it is clear the majority of SMEs still have a strong emotional attachment to owning their vehicles.

“However by not considering leasing, companies are missing an opportunity to better use their capital for future investment.”