December 04, 2019
Vansdirect are here to help you with the incredibly important decision of which van finance option to opt for with your brand new van, one of the options is van hire purchase, here’s everything you need to know!
As many of us know, choosing and buying a new van for your business can be exciting, confusing and on occasions stressful. When in reality, it should just be exciting. Buying new assets for any business shows you’re heading in the right direction, making money and growing. However there are a lot of different finance options available and all of which can be very confusing. Well don’t panic, here at Vansdirect we explain one of the most popular van finance choices when buying your new van, Hire Purchase (HP).
Van hire purchase is a straight forward way of financing your van. You make an initial payment known as the deposit. Then the remaining balance is spread equally over a number of years with payments agreed at the start of the van finance agreement. Then at the end of the agreement, you own the van. How simple is that?!
Hire purchase is an ideal choice for those looking to own their vehicle. By spreading payments over a number of years, known as the term, you can effectively manage your budget for the vehicle and this is shown as an asset on your balance sheet.
Unlike a van lease, the residual value of the van is not taken into consideration. Your monthly payment, which was agreed for your van at the start, are determined by the price of the van, the amount of deposit you have put into the agreement and the term in which it is take over. So your payments will be lower over a 5 year term compared to payments over a 3 year term.
The contract is officially between you and the lender. The lender effectively buys the van and allows you to use it while you’re making your repayments. Only when all repayments, also the option to purchase fee is paid, do you then officially own the van. Also with HP, there are no mileage restrictions during the agreement, which suits occupations such as couriers and builders who travel around the country.
If you’re VAT registered, then the VAT deposit can be reclaimed. 100% of the interest charges can then be off-set against taxable profits and interest is re-claimed against your tax bill. Again the van is also seen as an asset on your balance sheet.
Van Hire Purchase is one of the most popular van finance options when looking for a new van. Our teams of experts can help you find the right van finance as well as finding you the right van for your needs. We have range of van finance lenders which will be able to cater for all budgets, with some fantastic discounts on all vans available. Simply fill in a contact form or call us on 0800 169 69 95 and we are always happy to assist you.