What Are The Pros And Cons Of Purchase vs Long Term Rental?
When you review your companies transport requirements, the choice to Purchase or Rent your refrigerated vehicles is a both a critical and sometimes difficult decision. As we operate two refrigerated van businesses, one in each area, we have experience of both types of procurement and therefore are able to help you weigh up the pros and cons of each option. Therefore, in this section, we’ll explore both Purchase and Rental, helping you make an informed choice, which is tailored to your specific business requirements.
The Advantages of Long-Term Rental
Known Costs
One of the most significant advantages of Rental is that your costs, with the exception of fuel, fully comprehensive insurance and driver’s wages are all fixed for the period of the Rental. For example, if your business experiences seasonal fluctuations, Long Term Rental can be more economical than Purchase, as these variations are effectively amortised over the whole Rental period. Even if your business is not seasonal, you still pay a fixed rental price each month. This monthly rental covers the supply of a refrigerated vehicle built to your specification, which is fitted with decals of your company’s logos (not Pola Van Rentals) and includes all refrigeration unit maintenance, vehicle maintenance, Tyres (fair wear & tear, not damage) and annual Road Fund Licence costs. As ALL of these costs are covered in a monthly Rental price, you have a known cost vehicle for the 3, 4 or 5, year rental period.
All Types of Refrigerated Van
Whether you require a freezer specification, chill specification or pharmaceutical specification van, they can all be on a Long-Term Rental contract with Pola Van Rental. We can provide you with the ideal Rental vehicle for your specific cargo and temperature requirements.
Maintenance and Repairs
When you have a Long-Term Rental refrigerated van from Pola Van Rental, you will benefit from our expertise on maintenance and servicing, especially on the refrigeration unit. Our well-maintained Rental Fleet can also provide additional cover in the event of an unexpected breakdowns or VOR during an accident repair of another refrigerated vehicle from your fleet. In addition, as a Long-Term Rental customer, you’ll enjoy special Pola Van Rental pricing to help your business through these situations.
Flexible Rental Agreements
Pola Van Rental can also provide flexibility to adapt to changes in your business, For example:-
- We can easily adjust your current rental agreement to match any changes in your annual mileages, reducing potential end of Contract excess mileage charges.
- Offer an annual minimum 6-month Rental every year for 3 years, supplying the same vehicle at the same monthly rental rate, to cope with your seasonal demands (based on a minimum 3-year Contract)
Whatever you request, we are always happy to discuss flexible rental agreements to match your requirements.
The Advantages of Vehicle Purchase
Medium Term Investment
Depending on your accountant’s advice or your personal choice, purchasing your vehicles by Outright Purchase (Cash or Hire Purchase) means they will show as an asset on your balance sheet. If you Lease or utilise Long Term Rental, they will not be assets on your balance sheet. As an asset they will add to the value of the net worth of your business. However, unlike property or machinery commercial vehicles are always a depreciating asset. Consequently, their value will decrease over usage and time. However, they have value as a medium-term investment opportunity which will add to your business value and may be a valuable part of the negotiations if you decide to sell your business at some time in the future.
Customisation
The Outright Purchase of a fully specified factory ordered new refrigerated van, will always allow you to customise the final product to your exact specifications. You can tailor the van’s features to meet the unique demands of your business, ensuring that it perfectly suits your operations. Obviously, this is not always possible when utilising existing new vehicles from Stock or used refrigerated vehicles.
Based on a Long-Term Rental Contract of 3 or more years, Pola Van Rental does offer total customisation to your exact specification, allowing it to match this outright purchase advantage. Therefore, using a brand-new vehicle from Pola Van Rental for Long Term Rental means the final decision becomes solely based on your decision to rent or buy.
Warranty, Service & Maintenance and Residual Values
When you purchase a refrigerated van outright by Outright or Hire Purchase, all the responsibility for maintenance will be covered by you. However, you will have the vehicle and refrigeration unit manufacturer’s warranty to cover the first tranche of these costs, but in order to ensure this support, you will have to ensure that you fully comply with their terms and conditions of servicing and maintenance for the warranty period. You will also have the opportunity, with most vehicle manufacturers, to purchase an extension of their warranty for the first few months after first registration. These extensions will be mileage and/or time based. However, on the day these warranties expire you will have to cover all costs of breakdown, any component failure along with ongoing service and maintenance costs. On a positive front, you will own either all of or a portion of the vehicle by this time, and it will always retain some residual value, irrespective how small. When you have settled any outstanding Hire Purchase debt, it will be possible to utilise all remaining funds from the sale to use as a deposit on a new van or absorb into your business cash flow.
Long-Term Rental generally covers all costs associated with the vehicle for the full rental term, even when the manufacturers warranties have expired. However, in the case of any rental contract, you retain NO residual value when you return the vehicle at the end of the rental term
Full Ownership
Full ownership provides you with complete control over your refrigerated van. You do not have to adhere to rental agreements or return deadlines, which may be preferable for your business model. Your business name will also be on the V5 from when you purchased the vehicle and you will retain its final worth.
In conclusion, the decision between Outright Purchase or Long-Term Rental of your next refrigerated van ultimately depends on your specific business circumstances at the time, personal choice and the financial advice you receive. However, we can give free unbiased 3rd party advice as both Pola Van Rental and Vanfridge have over 20 years daily experience in both sectors.