When the Van Starts Costing More Than It Earns
Photo: Stuart Logan , CC BY-SA 2.0, via Wikimedia Commons
When a van is central to a trade business, the decision to keep, buy or lease is rarely about transport alone. It is a cashflow decision, a tax decision and an operational risk decision. By 2026, with used prices still unsettled in many sectors and clean air rules affecting more routes, the sensible starting point is not the forecourt sticker. It is the true weekly cost of keeping the work moving.
Start with the weekly number
Build a like-for-like weekly figure for each option. Include deposit, monthly payment, balloon or final payment, interest, insurance difference, road tax, servicing, tyres, fuel or charging, clean air zone charges, expected repairs, downtime cover and the likely resale value at the end. Divide the net cost by the number of weeks you expect to run the van. A £420 per month lease and a £9,000 repair bill on an older van can look very different once downtime and resale are counted. The aim is not to find the cheapest headline; it is to find the option your business can carry through a quiet January.
Keeping the old workhorse
Sentiment has no place in the decision, but neither does a blind rush to replace. Look at the last 24 months of repair bills, MOT advisories, days off the road and any recurring faults. If the van is reliable, compliant for your routes and cheap to maintain, keeping it may be the rational choice. Set a replacement trigger in advance: for example, more than a set number of unscheduled days off the road in a quarter, a repair bill above a set percentage of the van's value, or a failure that puts a contract at risk. A van that fails without warning on a Monday morning costs more than the repair invoice.
Clean air zones and route reality
Clean air zone and ULEZ charges have changed the arithmetic for older diesel vans. A daily charge may be small on paper but substantial across a working month. Check every regular route, not just the usual site. Also check the vehicle's compliance status with the local scheme, because rules and boundaries can differ. If the old van attracts a daily charge, add it to the weekly cost before comparing it with a newer vehicle. The same applies to resale: a non-compliant van may be harder to sell into your local market.
Finance or outright purchase
Outright purchase suits a firm with cash reserves and a long holding period. It removes monthly finance payments, but ties up capital and leaves residual value risk with the business. Hire purchase spreads the cost and usually ends with ownership. Contract hire can keep the vehicle off the balance sheet in accounting terms and gives predictable payments, but excess mileage and damage charges need reading. Finance lease can work for firms that want fixed payments and are comfortable with balloon risk. Tax treatment depends on the structure, the vehicle and the firm's position. Capital allowances can make purchase attractive, while lease payments may be deductible in different ways. Take advice from your accountant before signing; a tax assumption is not a discount.
Insurance and downtime
Insurance quotes should be like-for-like. A newer van may cost more to insure, especially if it carries tools, racking or sign writing. Lease agreements often require comprehensive cover and may set conditions. Downtime is the hidden line. A one-van business loses revenue every hour the vehicle is off the road. Ask about courtesy vehicles, service plans, recovery cover and local hire arrangements. An electric van may reduce fuel and charge costs on the right routes, but check payload, range, charging access and conversion costs. It is not automatically cheaper.
A decision routine
Write down the current weekly cost of the old van, including a realistic repair allowance. Get three quotes: keep with planned work, buy a nearly new van, and lease a new one. Add clean air charges, insurance and tax. Stress-test each option against four weeks off the road, a rise in finance rates and the loss of one regular customer. Choose on a three-year view, not a three-month one. Review the decision each year. There is no prize for buying or leasing. The proper choice is the one that keeps the work moving at a cost the business can carry.
