How does business van finance work?

Business van finance works similarly to other types of asset finance, providing you with the means to acquire a van for your operations, without having to pay the full purchase price upfront. Here's how it typically works:

1. Choose a van that aligns with your business’ needs.
2. Next, you’ll need to start your van finance application. You can do this by searching for funding with Capitalise. Once you fill in the questionnaire, you’ll receive dedicated support from a funding specialist who’ll match you with providers who offer the kind of business van finance you’re looking for. When it's ready, your application will be sent to the van finance providers of your choice.
3. If you’re approved, you’ll enter into a loan agreement with the provider. The terms will be outlined, including the loan amount, interest rate, repayment schedule, and any additional fees.
4. Depending on the provider, you'll either get the van, or you’ll receive the money you need to buy the van. 
5. Your business will start making regular payments according to the agreed schedule. These payments cover the principal amount borrowed, plus interest and any other applicable fees.
6. Depending on the finance option you’ve chosen, at the end of the agreement you’ll either: 

• Own the van after your final payment
• Have the option to purchase the van
• Return the van and upgrade to a newer model
• Return the van and end the agreement

Why finance a business van?

Preserve cash flow

By spreading the cost of the van over time, your business can preserve cash flow for other expenses.

Access to newer vans 

Van finance agreements often allow you to upgrade to newer vans more frequently, ensuring you have access to the latest technology and safety features.

Tax benefits

Payments made towards van finance can be tax-deductible. This means that you could save money by reducing your corporation tax bill. 

Flexible options

Van finance offers flexibility in terms of contract length, deposit amount, and end-of-term options, allowing you to tailor the agreement to your specific needs.

What documentation do I need to apply for business van finance?

You’ll also need to provide documents as part of your application. Make sure you have the following to hand if available:

• 6 months business bank statements
• Latest set of annual filed accounts 

Some lenders may request additional documentation depending on the specific requirements of the van finance agreement.

What type of van finance is right for my business?

There are several types of business van finance available, each one suited to different business requirements. Here’s an overview of the options available:

Hire purchase: make fixed monthly payments towards owning the van outright at the end of the agreement.

Finance lease: rent the van for an agreed period, with the option to either return the van or purchase it at the end of the lease term.

Operating lease: similar to finance lease but typically shorter-term, operating lease allows businesses to use the van without the responsibility of ownership.

Contract hire: a long-term rental agreement where the business pays a fixed monthly fee for using the van, with maintenance and servicing often included.

What options will I have at the end of the term?

Before entering into a business van finance agreement, it's essential to understand the end-of-term options available to you. Depending on the type of finance arrangement, you may have the choice to:

Own the van: With hire purchase or finance lease agreements, you may have the option to purchase the van outright at the end of the term by paying a final balloon payment or nominal fee.

Return the van: Operating lease or contract hire agreements typically involve returning the van to the leasing company at the end of the term, with no further obligation.

Upgrade or renew the van: Some finance agreements offer the flexibility to upgrade to a newer van or enter into a new finance agreement at the end of the term.

Can I get business van finance with bad credit?

While having a good business credit score can improve your chances of approval and allow you to access favourable terms, it's still possible to get business van finance with bad credit. However, you may have to pay higher interest rates or a larger deposit to mitigate the lender's risk.

Business van finance calculator

You can use our Business Loan Calculator to help you estimate the costs involved in van finance. This will take into account factors such as the van's purchase price, deposit amount, interest rate, and term length to provide an estimate of your monthly repayments.

While the actual costs may vary based on your individual circumstances and the lender, the Business Loan Calculator will give you a useful starting point for budgeting.

If you’re unsure of how much you could borrow, you can sign up to Capitalise to check your eligibility for funding. You can also speak with one of our funding specialists who’ll use their expertise to help you understand what you could be eligible for and the options that could work for your business. 

Environmental considerations: electric and low-emission vans

With an increasing global emphasis on sustainability and environmental responsibility, you may be interested in exploring options for electric or low-emission vans. While the initial purchase price of these vehicles may be higher, incentives, such as government grants, can make them a viable choice for eco-conscious businesses.