To lease or to finance a wheelchair van has been a topic greatly debated over the years and many web pages have been dedicated to the topic. My goal over the next few hundreds of words is to shed some light on wheelchair van financing & leasing to help you make an informed choice the next time you are ready to buy a wheelchair accessible vehicle.
Van Financing & Leasing Helps You Attain Freedom Sooner
I think it is important to look overall at why financing and leasing are a good thing to do when it comes to purchasing a vehicle. The biggest reason we see here at Move Mobility is most people plan their expenses on a month-by-month basis. Most of our customers look at their expenses and say, “what can we realistically afford each month to pay for a wheelchair van?” Once that number is decided upon, it makes the whole purchase process a lot easier.
The second big reason is twofold. In only a few circumstances do customers have the money upfront for a wheelchair accessible vehicle and are able to pay cash. The other reason is not everyone gets approved for third party funding or the funding isn’t enough to cover the whole purchase. Alternate options are needed to purchase the van.
The Opposite Side of the Coin
As much as it is important to know the positive reasons for leasing & financing, it’s also good to know the downsides.
Reason #1 – Not everyone wants to go into debt.
It is hard walking around with thousands of dollars owing on through wheelchair van financing or leasing. In the future, when you want to borrow money for a new home or renovation, financing is calculated into your debt/equity ratio. (Interestingly, leases are not factored into this calculation by financial institutions.)
However, how realistic are the alternatives of waiting for funding to one day possible come through or saving enough cash to buy the van outright?
Reason #2 – People criticize vehicles as being bad debt.
I would tend to agree with this argument. Except, a wheelchair van is no longer a regular van. It serves a unique purpose of providing freedom. As well, when the ramp is added to the vehicle, it enhances and helps retain the value of the vehicle for longer.
Just this morning, I saw a dealer in BC selling a 2012 Dodge Grand Caravan that sold for $34,900. Considering a brand new version of the same model sells for only $6,000 – $8,000 more, I would say that is a pretty low depreciation value.
The Differences Between Leasing & Financing
These are some reasons why wheelchair van financing or leasing are great options. There are some similarities between the two but some definite differences as well. Keep on reading to see the difference.
Why finance your van?
Reason #1 – You own the wheelchair van when you are done making the payments
When you finance your wheelchair van, you will own the van at the end of your term, unlike a lease where at the end of the term, there may be a residual value still owing on the vehicle.
Reason #2 – You are not limited on the kilometres you drive
Drive the van how you like, when you like.
Reason #3 – Build all costs into the Finance
When you finance, you can add in your warranty costs to the total purchase price, breaking up the cost into smaller payments.
Reason #4 – Flexibility
Payments can be broken down into monthly, semi-monthly or weekly payments. As well, the length of the term can be stretched out for more than five years in most cases.
Why lease your van?
Reason #1 – Tax Benefits
Wheelchair van lease payments are 100% tax deductible as an operating expense. This is not the case with capital expenses done through financing.
Reason #2 – Conserve Capital
Keep your money working for you, instead of tying up your financial resources in vehicles. Instead, leases can be setup to represent a rental expense and kept off your company’s balance sheet keeping your ratios inline with your bank.
Reason #3 – Defer both P.S.T, G.S.T & H.S.T
You don’t have to pay the taxes up front and pay interest on those taxes. Your taxes are only paid on the monthly lease amount excluding any down payment you make.
Reason #4 – Pay as You Profit
Pay for the van as it either earns or saves you money each month. Flexibility Payments can be customized to suit your needs. Payments can be broken up into weekly, semi-monthly or monthly options.
Reason #5 – The 100% Lease
This means all costs included with leasing the wheelchair van (ex. shipping, handling, training, etc) can all be included in the wheelchair van lease cost.
In the end, it is really up to you on what you want to do. Both van financing & leasing options are good. The leasing offered by us is a bit different than your typical lease as the kilometres are not restricted and there are no restrictions on the body of the vehicle. The finance options we have are great as we can get interest rates and payment options from a variety of institutions and lenders.