How to Lease a Cargo Van

The simple cargo van is an essential type of vehicle for a wide range of businesses. They are popular with contractors who can upfit them with shelves, hangars, drawers and other accessories to help them keep their painting, electrical, plumbing or other tools organized. 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. If the original arrangement works out, you can buy the van or extend the lease. The type of lease for a commercial-use vehicle works quite different from the leases on personal use cars. Understanding some of the basics with a cargo van lease will help you negotiate the best deal for your situation.

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.

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 ​10​ and ​20 percent​ of the van's purchase price for the lease term, explains Merchant Maverick.

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​.

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 van 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.

At the end of a TRAC lease, you can buy the vehicle for the residual value or return it to the leasing company, notes SLR Equipment Finance. 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. You should also find out what happens if you want to terminate the least early.