What Is Hire Purchase on a New Van?
Hire Purchase is a great way to finance your next new van. It's an easy way to buy a new or used van, by breaking the purchasing cost into monthly payments.
At the end of the agreement, you will gain ownership of the van. It's important to note that you are not the legal owner of the vehicle until you have made the last payment.
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How Does New Van Hire Purchase Work?
At the beginning of the contract, you are expected to pay a deposit for your new van. The deposit is generally 20% (VAT) or more of the van's value. You can also choose the term of your agreement. This is usually from two to five years.
Note that you can offset the 20% deposit (VAT) against your next VAT return.
During the contract period, you will make affordable monthly instalments until the end of the contract. When you have made the last payment, you are the owner of the van.
Your annual percentage rate will vary depending on the vehicle as well as your credit score. This is why it's important to keep your credit score as high as possible.
Advantages of New Van Hire Purchase Deals
- Flexible monthly payments allow easier budgeting
- You own the van at the end of the agreement
- The 20% deposit can be offset with the next VAT return
- Interest can be claimed against your tax bill
- Fixed rates throughout the contract are not subject to VAT
- No need for a large sum of money to purchase your ideal new van
- No mileage restrictions
Is new Van Hire Purchase Suitable for Me?
If you have a good credit score, Hire Purchase is a great way to buy your next new van. It offers a flexible way to pay off the value of the vehicle, while gaining ownership at the end of the agreement. You can also budget more easily with manageable, fixed monthly payments.
However, if your credit score is less than good, we also offer other finance options. Suitable for all budgets and needs, you can browse our Van Leasing, Van Contract Hire, and Van Fleet Leasing finance offers. To read more about all our finance options, visit our van finance page.
What Will I Need to Apply for A New Van Hire Purchase Deal?
To be eligible for a new van Hire Purchase offer, you must have a good credit score. We will conduct a credit check on all applicants. You must also have proof of the following:
- Three-year address history
- At least one credit item in the past three years
- You are a UK resident
- You own full UK driving licence
- Your income
If you are unsure whether you can apply, get in touch with our Vansdirect team. We are happy to help you find the right finance option for you.
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FAQs of new Van Hire Purchase
What Are the Benefits of New Van Hire Purchase?
With fixed monthly instalments, you can budget more easily. A new Van Hire Purchase deal is a flexible way to buy a new van, without having to take too much cash out of your business at once. You can also offset the 20% deposit (VAT) with your next VAT return.
Is A New Van Hire Purchase a Good Idea?
New Van Hire Purchase is a great finance option for businesses looking to budget easily. With manageable monthly payments, you can adjust your deposit to an amount that suits you.
What's The Difference Between new Van Hire Purchase and new Van Contract Hire?
With new Van Hire Purchase, you are financing the full value of the van, minus the deposit, to get ownership at the end of the contract. With new Van Contract Hire, you are simply renting the van throughout the agreement, but must hand it back in the end.
What Credit Score Do I Need for a New Van Hire Purchase Deal?
There isn't a specific score that you must achieve to be approved for new Van Hire Purchase finance. The higher your score, the more likely you are to be approved for finance. Generally, if your credit score is good or higher, you should have no problem being accepted.
Is A Balloon Payment Needed for new van Hire Purchase?
There's an option to choose a new Van Hire Purchase deal with or without balloon payment. If you decide to choose the option with a balloon payment, you are expected to pay a larger sum at the end of the contract to gain the ownership of the van.
The Van Hire Purchase deal with a balloon payment may be the right option for you if you wish to keep the monthly payments as low as possible. However, if you want lower monthly instalments, you must make the final balloon payment before you gain legal ownership of the van.