Van Finance Explained

When buying a van, you want to make sure you’re taking out the finance contract that best suits your needs. That’s why we have created an article that outlines the most common types of agreements and explains the benefits of each.

Hire Purchase

Hire purchase means you are hiring the vehicle from the lender for a specific time period until your monthly payments have been completed. At the end of the contract the van is yours.

Monthly payments will depend on your preferences and budget as well as your credit score and the lender. Hire purchase means that you are not limited to the number of miles you can do in the vehicle. The monthly payments on a hire purchase contract tend to be slightly higher because you own the vehicle at the end.

Lease Purchase

Like Hire Purchase, you pay monthly instalments over a specific amount of time, at the end of your contract however, you are given the option of buying the vehicle after the final payment. The monthly payments are usually a bit cheaper, but at the end of the contract you will have to pay the deferred sum if you choose to buy out the vehicle.

Personal Contract Hire

Unlike hire purchase and lease purchase, you won’t own the vehicle at the end of the agreement. It is essentially only renting the vehicle. You are also restricted to a mileage limit. This is sometimes preferred as it’s a cost-effective way of upgrading.

Personal Contract Hire

This is a contract where you have the option to return the vehicle at the end of your contract or pay a sum at the end to take ownership of it. You are also able to choose to exchange the vehicle for another. In this type of contract, you are restricted to a mileage limit.

Business Contract Hire

Essentially the same as personal contract hire, this type of van financing allows businesses to rent a van for an agreed period. This can be seen as cost-effective for a business because you can drive the van that suits your business at a more cost-effective rate. This can also have administrative and tax benefits.  

Finance Lease

A finance lease agreement is more flexible and allows you to rent a vehicle for a pre-determined period. At the end of the agreed period, you can choose to extend the lease or allow the vehicle to be sold. Finance lease’s come with advantages as well, there are no penalties for damage or excess mileage. They have tax benefits to VAT registered companies as well.

Personal or Business Loans

Securing a personal or business loan is a straightforward way of financing a van. It involves paying the deposit and making monthly repayments. However, if you fail to make the payments you risk losing the van. 

If you are unsure whether you are eligible for finance fill out our quick and easy online finance application today.