New Vans on Finance

What is van finance?

Van finance is an affordable means of hiring or purchasing a van, spreading the cost of the vehicle over multiple monthly instalments. This means that customers no longer need to shell out the entire asking price of a van or pickup truck in one substantial lump sum, only being required to pay an initial rental fee.

With Vansdirect, you can choose between three types of van finance options: hire purchase, finance lease, and contract hire. Bear in mind, there's no one-size-fits-all approach here, with each type of van finance deal suited to different budgets and financial situations.

Continue reading, below, to find out more about the different ways to hire or buy a van on finance.

Hire purchase

Hire purchase (or HP) contracts are a way to buy a van on finance which allow drivers to own their van only at the end of their contract. The cost to use the vehicle is spread over monthly instalments.

At the start of a HP contract, drivers need to pay a deposit, which is usually 20% of the vehicle's value (although there is an option to put down a bigger lump sum to reduce the subsequent monthly payments). Then drivers choose how long the HP van finance contract will last, typically between two to five years of repayments.

Once all these monthly payments have been made, drivers have full ownership of the van. It's important to remember, however, hire purchase contracts are an agreement secured against the van. All payments must be made to own the vehicle outright.

Benefits of choosing a hire purchase contract

Spread the cost with manageable fixed monthly payments

Flexible contracts that last between two to five years

Drivers own their van at the end of their contract

Finance lease

Finance lease contracts are a means of hiring the newest van models for a specific period of time, paid via monthly instalments. Once the rental period comes to an end, you return the vehicle - or, if you're taking out van finance for your business, you can make a final balloon payment to own the van outright.

Flexibility is the main benefit of van leasing. You not only have the freedom to fix the monthly costs, but you also have the options to upgrade to the newest van model, come the end of your rental period. All you need to do is pay a minimum of three monthly instalments in advance and then decide how much you'd like to pay each month.

For businesses, there are also recoverable VAT and corporation tax benefits. What's more, the van will appear off the company balance sheet, as it's technically owned by the lease company.

Benefits of choosing a finance lease contract

Spread the cost with manageable fixed monthly payments

Flexible contracts that last between two to five years

Hire only for the time you need the van

Option to pay to own the van outright at the end of the contract

Option to upgrade to a newer model at the end of the contract

Contract hire

Similar to finance leasing, contract hire agreements involve hiring a van over a specific period of time, typically between two to five years. You return the vehicle at the end of the contract, which allows you to upgrade your van every few years.

The major difference from finance leasing is that you always return the van to the leasing company at the end of the contract. The monthly payments of contract hire agreements are also determined by forecast depreciation, based on the original cost of the vehicle, potential mileage, and rental period length.

There's less flexibility in the terms (mileage limits are often included, for instance), but you can enjoy lower monthly payments as a result.

Benefits of choosing a contract hire agreement

Spread the cost with manageable fixed monthly payments

Flexible contracts that last between two to five years

Hire only for the time you need the van

Depending on terms, monthly payments can be lower than other van finance options

Frequently asked questions about van finance

How do I apply for van finance?

The first step to apply for van finance is to enquire with Vansdirect. Just fill in your details and a friendly member of our team will be in touch with a quote and details on your next steps.

What do I need to finance a van?

While application criteria may differ depending on the type of van finance deal, you typically need to provide the following documentation:

Address history for the past three years

One credit item in past three years

Proof of UK residency

Full UK driving licence

Proof of income

If you want to take out van finance for business use, you'll need to also provide:

Proof of positive trading

Director can sign as guarantor

Can I get van finance with bad credit?

All applicants for van finance will be required to undergo a credit check. Don't worry, you can still apply for van finance with a poor credit score, although the monthly instalments will increase accordingly.

If you want to find out how to make lenders confident you will repay, take a look at our how to improve credit score guide.

Is there a mileage cap on van finance deals?

Whether or not leasing companies set an annual mileage cap depends on the type of van finance deal you opt for. Contract hire agreements, in particular, typically include these mileage caps, which will incur a charge at the end of the contract if you exceed that figure.

How long do van finance contracts last?

Most types of van finance agreements allow you to choose payment terms between two to five years, though the final decision is yours.

What happens if I don't pay my van finance?

Should you miss any payments on your van finance, the lender will get in touch. This could result in extra interest charges being added to your bill, depending on the terms and conditions of your contract.

If missed payments continue, the van could be repossessed.