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Published: 19 Mar 2026 | Last reviewed: 19 Mar 2026 | Reviewed by: VanCompare Editorial Team
A decade ago, a Lex Autolease-commissioned survey argued UK SMEs were tying up large sums in owned vans instead of using leasing. In 2014, Lex said 77% of SMEs surveyed had never leased a vehicle, and 54% didn’t intend to. The research was based on 250 SME decision makers.
That’s interesting history — but the most useful question for UK businesses today is simpler:
Which funding route gives you the right mix of cashflow, flexibility and risk for how you actually use your vans?
The main options SMEs use
Most SME van funding sits in four buckets:
1) Buy outright (cash)
Best when you want maximum control and you keep vehicles longer.
Trade-offs: cash tied up, depreciation risk, unpredictable resale values.
2) Hire purchase / loan (you own at the end)
Spreads cost and can work well if you plan to keep the van beyond the finance term.
Trade-offs: you still carry depreciation and disposal risk.
3) Leasing / contract hire (you don’t usually own)
Often used to protect cashflow and keep vehicles on a planned replacement cycle.
Trade-offs: mileage and condition expectations, early termination costs, and the van isn’t an owned asset at the end.
4) Rental / flexi-hire (shorter-term flexibility)
Can suit uncertain demand, seasonal work, or when you’re waiting on vehicle supply. BVRLA commentary suggests uncertainty has helped drive interest in hire/flexi-hire as alternatives to acquisition for some businesses.
Why the “cashflow” argument still matters in 2026
Even if you prefer owning vans, access to finance and the cost of borrowing influence what’s sensible.
UK asset finance remains a major way businesses fund vehicles and equipment. The Finance & Leasing Association reports month-to-month changes in asset finance activity and notes that products like operating leasing and hire purchase form a large part of this market.
And the leasing market itself is mixed: the BVRLA’s January 2026 Leasing Outlook highlights that van leasing volumes have been under pressure versus cars, with the BVRLA’s van lease fleet down year-on-year (while the combined car-and-van lease fleet is near 2 million).
(That doesn’t mean leasing is “bad” — it means availability, pricing and demand conditions can vary by segment and year.)
A balanced checklist: buy or lease?
Use these questions to decide.
Buying can suit you if…
- You keep vans for longer periods and can live with depreciation swings
- Your mileage/wear is high or unpredictable
- You want to modify vehicles (racking, conversions) without lease constraints
- You have enough cash reserves that buying won’t limit growth
Leasing can suit you if…
- You prioritise predictable monthly costs and planned replacement cycles
- You’d rather avoid residual value risk and disposal hassle
- Downtime is expensive and you value bundled maintenance options
- You want flexibility to refresh as requirements change (ULEZ/CAZ, electrification, payload needs)
Important: don’t treat old “savings” figures as today’s reality
Lex’s 2014 report-style coverage included specific average van prices, replacement cycles and a headline estimate of money “tied up” in owned LCVs. Those figures are not reliable as current benchmarks because vehicle prices, interest rates, supply conditions and lease pricing have all changed since then.
If you want to compare properly today, ask for quotes on a like-for-like basis:
- Same van model/spec
- Same contract term and mileage
- Maintenance included vs excluded
- What happens at end-of-term (return, balloon, purchase option)
- Early termination conditions
Insurance implications (whatever funding you choose)
Funding choice doesn’t replace insurance — but it can affect admin and disclosure:
- Correct owner/keeper details: leased/financed vehicles may need the finance/lease interest noted on the policy (where required by the provider).
- Modifications: racking, signage, conversions and added security should be declared.
- Use and mileage: courier/delivery, tool cover needs, and annual mileage affect risk rating.
- Claims and downtime: your biggest cost is often lost working time — choose cover and processes that help you get back on the road quickly.
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Sources
- Leasing Life, Lex: £6.7bn of depreciating vehicle assets restricting UK SME growth (15 Aug 2014): View source
- TheBusinessDesk, SMEs burdened by £6.7bn worth of depreciating vehicle assets – Lex report (23 Jul 2014): View source
- Finance & Leasing Association (FLA), Asset finance new business grew by 11% in September 2025 (11 Nov 2025): View source
- BVRLA, Leasing Outlook Report January 2026 (PDF): View source
VanCompare Editorial Team
The VanCompare Editorial Team produces clear, practical guidance on UK van insurance and related topics. We work with FCA authorised insurance providers and use insurer information where relevant to explain cover in plain English and help drivers make informed decisions.
- Where relevant, our content is checked against publicly available UK guidance and information from sources such as the FCA and GOV.UK to help keep it accurate and up to date.
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