Van finance companies for businesses: HP and lease providers

Choose the type of agreement first, then compare van finance companies that offer it on the same terms. Our van finance guide explains hire purchase against leasing in detail. In short:

• Hire purchase. You pay a deposit and monthly instalments and own the van at the end. Suits a van you will keep for years.
• Finance lease. You use the van for the term without owning it, and usually share in its sale value at the end.
• Contract hire. You rent the van for a fixed period and mileage, then hand it back. Suits fixed monthly costs.

Then compare providers on five points:

• Minimum deposit or advance rental.
• Available terms, and whether a balloon is offered on hire purchase.
• New and used vans, and the age limits for used ones.
• Mileage limits and excess mileage charges on contract hire.
• Eligibility: trading history, turnover and whether you must bank with the provider.

The table shows vehicle and asset finance products from providers in our directory of UK business lenders, in each provider’s own published words, listed alphabetically.

Dawsongroup Finance does not publish amounts or terms. It says it specialises in wheeled assets, offers finance leases, operating leases, hire purchase and fleet funding for contract hire companies, and does not ask for complex security beyond the asset-backed structure. It lends to large corporations and SMEs.

Lloyds Bank publishes hire purchase funding from £15,000 after a minimum 10% deposit, finance leases funding up to 100% of the price, and vehicle contract hire with no deposit for new vehicles only. It asks for a UK business with turnover of more than £100,000 a year that has traded for at least 13 months, and its page says you do not need to bank with Lloyds to apply.

Because Lloyds Bank’s contract hire is for new vehicles only, a business that wants a used van will usually be looking at hire purchase, a finance lease or a loan instead. Ask any provider for its age and mileage limits on used vans before you choose one.

Lombard publishes both hire purchase and contract hire for vans on its own site.

• Hire purchase. Terms of 12 to 84 months, with an option to reduce monthly payments with a final lump sum (balloon). Lombard says there is no arrangement fee when you apply online, that fixed-rate agreements may carry early settlement charges and that variable-rate agreements carry none. You own the asset once you have paid in full and paid the option-to-purchase fee.
• Contract hire. Lombard sources the car or van, you pay an advance rental followed by fixed monthly rentals, typically for 24 to 48 months, choosing an annual mileage typically between 5,000 and 50,000 miles. At the end you hand the vehicle back, subject to the contracted mileage and the BVRLA fair wear and tear standards. Maintenance is optional.

On contract hire, Lombard says security, guarantees or indemnities may be required and product fees may apply, so ask for the full cost, including the advance rental and any fees, before you compare it with hire purchase.

A larger deposit reduces the amount financed and the interest. A balloon lowers the monthly payment but increases the total interest, because part of the debt stays outstanding for the whole term. When you compare business van finance deals, line them up on the total amount payable, not the monthly figure.

Our guide to working out asset finance repayments shows the arithmetic with worked examples.

Vans are treated differently from cars for VAT. HMRC’s VAT Notice 700/64 says that as a general rule you cannot recover the VAT on buying a car, and that you cannot normally recover 50% of the VAT on leasing a car used privately. Its definition of a car excludes vehicles with a payload of one tonne or more, so those car restrictions do not cover most vans.

For income tax and corporation tax, GOV.UK says the annual investment allowance is £1 million, business cars are excluded, and on hire purchase you can claim for the payments due under the contract once you start using the item, but not the interest. On contract hire the finance company owns the van. Capzy does not give tax advice, so check your position with your accountant.

Electric vans are financed in the same ways, and a government grant can come off the price. Our guide to electric vehicle and charger finance covers the grants and allowances.

Other ways to fund a van include:

• An unsecured business loan, so you own the van from day one and can buy from any seller.
• Refinancing a van you already own to release cash, which Lloyds Bank offers as sale and hire purchase back.
• Dealer finance arranged at the point of sale, which you can compare with an independent quote.

Capzy is a credit broker, not a lender, and the lender pays us when a facility completes. We describe providers from their published terms and do not rank them. You can check your funding options with a soft search that does not affect your credit score. A full application may use a hard search, and all finance is subject to status and lender criteria. Our page on asset finance explains how providers assess an application.