Vehicle Finance for your Business

Investing in vehicles is an important decision for many businesses, whether you need a single car for client meetings or an entire fleet to support daily operations. The right vehicle finance can help you spread the cost, protect cash flow and take advantage of valuable tax benefits. It also enables you to choose the vehicles you need without putting pressure on your working capital. With Capitalise, finding and financing a vehicle for your business is simple. You can look up a vehicle by registration, make or model to estimate costs instantly, compare offers from multiple lenders, and work with a dedicated funding specialist to guide you through the process. This guide explains how business vehicle finance works, the different options available, the benefits to your business and how to apply with confidence.

What is vehicle finance?

Business vehicle finance is a way for your company to purchase vehicles without paying the full amount upfront. Instead, you make monthly payments over an agreed term. This can apply to a single car or an entire fleet. Most vehicle types can be financed through your business, including:

Cars for client visits or sales teams
Vans and commercial vehicles for deliveries, construction or logistics
HGVs, lorries and specialist vehicles for haulage, manufacturing or field services
Electric or hybrid vehicles for businesses looking to reduce emissions

Generally, if the vehicle is used for business purposes, it can usually be financed through your company.

What are the main types of business vehicle finance

Understanding the different finance options available will help you choose the most suitable approach for your business. Each type offers a different balance of ownership, flexibility and tax treatment. Here’s the main types available:

Finance Type	How it works	End of term options	Best suited for
Finance lease	Allows you to use a vehicle for a fixed period while making regular rental payments. Your business does not own the vehicle but can decide how it is used.	You can return the vehicle, extend the lease or sell it on behalf of the lender and keep a portion of the proceeds.	Businesses that want predictable payments and do not want the vehicle recorded as an asset on the balance sheet.
Hire purchase	Allows you to spread the cost of a vehicle over time through monthly instalments that include interest. Ownership transfers to your business once the final payment is made.	You gain full ownership of the vehicle at the end of the agreement.	Businesses that want long term use of the vehicle and wish to benefit from capital allowances.
Contract hire	Provides access to a vehicle for a fixed period with monthly rental payments and no option to purchase. You return the vehicle at the end of the contract.	You return the vehicle at the end of the term.	Businesses that prefer to update vehicles regularly and avoid the risks associated with depreciation and resale.
Operating lease	Offers short to medium term access to a vehicle without ownership responsibilities. The lease term is shorter than the vehicle’s lifespan, so you only pay for its use.	You return the vehicle at the end of the lease.	Businesses with short term, project based or seasonal vehicle needs.

How to decide whether to lease or finance your vehicle

Factor	Leasing	Financing
Monthly payments	Usually lower	Typically higher
Ownership at end	No	Yes
Flexibility	Easier to upgrade regularly	Less flexible
Long-term cost	May be higher overall	Often more cost-effective
Balance sheet impact	Treated as rental expense	Recorded as an asset

Leasing works best if you prioritise flexibility and lower upfront costs. Financing makes more sense if you want ownership and to build long term value. For more detail, take a look at our article on comparing leasing and financing a vehicle.

What are the benefits of financing a vehicle through your business?

Financing your business vehicles instead of buying them outright can offer several important advantages:

It helps preserve working capital by spreading costs over time
It allows you to claim various tax benefits depending on the finance type
It makes it easier to upgrade vehicles regularly
It supports your business credit profile through consistent repayments
It improves cash flow and helps protect funds for other priorities

Are there any tax considerations for vehicle finance?

If you finance a vehicle through your business, you may benefit from Corporation Tax relief through Capital Allowances. If you choose to finance through hire purchase, you'll own the vehicle at the end of the agreement. This not only allows you to claim up to 100% tax relief through Capital Allowances but also enables you to claim interest paid in your monthly repayments. As a result, your business profits decrease, leading to potential savings in Corporation Tax. Leasing a vehicle means you won't own it at the end of the agreement. Currently, this does not make it eligible to claim Capital Allowances. However, you can still claim monthly rental payments, offering opportunities to reduce your Corporation Tax liability. In the UK’s Spring Budget 2024 it was announced that Full Expensing Capital Allowances would be extended to vehicle leasing. The legislation for this is yet to be published, but it’s worth bearing in mind if you’re considering leasing a vehicle. You could speak with your accountant when considering finance to be clear on the current legislation and tax relief that applies.

Additional vehicle finance solutions

As your business grows, your transport needs may change. There are some specialist finance solutions that can support sustainability goals, make managing multiple vehicles easier or help with restructuring existing finance agreements.

Financing electric and hybrid vehicles

Electric and hybrid vehicles are becoming increasingly popular for businesses. They offer lower running costs, reduced emissions, and access to government incentives.

Financing an electric vehicle can help you switch to a greener fleet without paying the full cost upfront. Many lenders now offer specific finance options for EVs, and through Capitalise you can compare these offers easily across multiple lenders. You can find out more about buying an electric vehicle in our article.

Fleet finance for growing businesses

If your company runs several vehicles, fleet finance can help you manage them all in one place. This can save time, reduce paperwork, and often provide better rates.

Fleet finance allows you to:

Spread the cost across multiple vehicles
Simplify renewals and upgrades
Access better terms for bulk vehicle purchasesKeep all maintenance and payments under one agreement

Refinancing options

If you already have a vehicle on finance, refinancing could help reduce your monthly payments or free up cash. You can also refinance if you’re coming to the end of your agreement and want to keep the vehicle rather than return it. Through Capitalise, you can explore refinancing options from a wide range of lenders. Just start an application and you can speak to one of our expert funding specialists about the best route for your business.

How to get vehicle finance?

When you apply for business vehicle finance, lenders will assess how creditworthy your business is. They will usually check:

Your business credit score
Proof of your identity and business address
Recent business accounts or financial statements
Details of the vehicle you want to finance

You can check and boost your business credit score directly in your Capitalise account. A strong score can help you access better finance options and lower interest rates. For tips on how to boost yours, read our article on how to build business credit.

Practical considerations before applying

Before applying for finance, there are a few important points to consider so that you can choose the most appropriate agreement for your business. These are:

Vehicle value and depreciation

A vehicle’s value drops over time, and this is called depreciation. When you lease, the lender takes on this risk. When you buy or finance a vehicle, your business takes it on. You will also own the vehicle at the end, which means it still has some resale value. If you only need vehicles for short term use, leasing may make more sense. If you plan to use them long term, financing and owning the vehicles could work out better overall.

Insurance and maintenance

Before you take out vehicle finance, make sure you have the right insurance. Most lenders require comprehensive cover. If you lease a vehicle, maintenance packages are often included in the agreement. These can cover services, tyres, and breakdown assistance, making your costs more predictable. You can also consider GAP insurance, which covers the difference between what you owe and what your insurer pays if the vehicle is written off or stolen.

How to apply for business vehicle finance with Capitalise

Applying for vehicle finance through your business is simple through your Capitalise account:

Start by logging in to your Capitalise account and selecting vehicle finance from your today page.
You can then search by the registration, make or model of the vehicle to instantly see an estimate of the cost and understand how much your business may be able to borrow.
If the vehicle looks suitable, complete your application and receive dedicated support from a funding specialist who will explain which documents you need to provide and which lenders are the best match for your business.
Once your application has been submitted, you can compare the offers you receive from multiple lenders in one place to clearly understand the differences between each option.
When you have chosen the most suitable offer, you can review the agreement, which will outline the repayment terms, ownership information and any conditions such as mileage limits or insurance requirements.

Vehicle finance is an effective way to grow your business, without placing pressure on your cash flow. Whether you need a single vehicle or a complete fleet, Capitalise makes the process straightforward by providing quick cost estimates, access to a wide panel of lenders and support from specialists who can guide you to the best solution. With the right finance in place, you can keep your business moving and invest confidently in the future of your operations.

Your guide to vehicle finance for businesses