How to Lease a Cargo Vanby Tim Plaehn
The simple cargo van is an essential type of vehicle for a wide range of businesses. A van can transport goods protected from the weather, or the van can be set up as a mobile workshop. Leasing a van for business use reduces the upfront costs to get the van and provides some tax benefits. The type of lease used for a commercial use vehicle functions quite different from the leases on personal use cars.
Work With a Commercial Vehicle Department
The major U.S. vehicle manufacturers and several foreign car companies manufacture and sell cargo vans. Commercial use vehicles typically are sold by a separate commercial sales department inside dealerships. Cargo vans come in a range of sizes and load capacities, and a dedicated, commercial vehicle salesman will work with you to select the van and equipment that fits your business needs. Not all dealers have a commercial sales department, so call several in your area for the van brands you might be interested in and ask for the commercial department.
Commercial Use Leases
Finance companies offer Terminal Rental Adjustment Clause leases for use with commercial vehicles. A TRAC leased van must be used at least 50 percent for business purposes. With a TRAC lease, the residual value is flexible and is typically set somewhere between $100 and 20 percent of the van's purchase price for the common five year lease term. These leases have no mileage or wear and tear restrictions, eliminating the worries of how much your van gets driven and abused. The lease term can range from two to five years.
Qualifying for Credit
The commercial credit application requires financial information about both your business and the principal owners of the company. For a business without established commercial credit, the company owners will be required to provide personal guarantees on the lease. If your business develops a relationship with a commercial finance company with the lease or through financing of a fleet of vehicles, at some point the company will be able to obtain financing on its own business credit without the personal guarantees.
End of Lease Considerations
At the end of a TRAC lease, you can buy the vehicle for the residual value or return it to the leasing company. If it is returned, when the van is sold you will participate on the actual value of the vehicle. If the van sells for more than the residual, you will receive the excess money. If the van sells for less than the residual, the contract requires you to pay the difference to the leasing company.
- Anna Dyudina/Hemera/Getty Images