Finance your van with a business loan

Many businesses use vehicles to make running their day-to-day possible – but not all of them have the cash they need to pay for one upfront. That’s where business van finance comes in. But what are the different types of finance available? From contract hire to hire purchase, or leasing to a business loan, there are a  few different options to choose from. But how do you know which is right for you?

In the past, buying a van for your business would have required you to have the cash you need to pay for it upfront. That could mean require a lot of working capital, especially if you needed to purchase a whole fleet of company vehicles. Business van finance makes this a little easier, providing you with the funds you need to purchase vehicles and grow your business. ‍

Read below to find out about the different types of business van finance.

So, you now know what business van finance is – but what’s the difference between a contract hire and a hire purchase? We’ve done the research so you don’t have to. Read on to learn about each type of business van finance and whether it’s suitable for you.

‍

• contract hire: if you need a van for your business, but aren’t bothered about owning it at the end of your contract, then look no further – contract hire could be the right type of van financing for you. Whether you’re a sole trader or the director of a limited company, contract hire acts as an extended rental option for businesses looking to get their hands on a new set of wheels. At the start of your contract, you’ll pay a larger initial payment followed by fixed monthly instalments. These cover your use of the van for an agreed mileage, and you’ll usually have the option to pay a little extra for repairs and roadside assistance if you run into trouble. You’ll get a new van every couple of years, and, because you’re not purchasing it, you won’t have to pay a larger, final instalment at the end of your contract.

‍

• leasing: if you want to lease a van through a limited company or as a sole trader, and work in an occupation where you’re likely to be driving a lot of miles, leasing could work for your business. That’s because you’ll take on responsibility for the condition of your vehicle, with no caps on mileage and the chance to be rewarded for giving it back in good condition. You and your dealer will agree on what the van’s worth at the beginning of your contract – if this value turns out to be higher at the end, you’ll pocket the extra, while if it’s lower, you may have to front the difference. The actual payment structure of a van finance lease is similar to a contract hire – after paying a larger sum upfront, you’ll be responsible for fixed monthly payments to cover its use.

‍

• hire purchase: a van hire purchase is very similar to a contract hire, except when your finance is finished, you’ll own the vehicle outright. With this form of business van finance, you’ll pay two larger ‘balloon payments’ at the start and end of your contract, with fixed monthly instalments in the middle. Contract lengths are often fairly flexible, as are restrictions on mileage, with some dealers even offering additional breakdown and repairs cover for a little extra each month. At the end of your contract, you’ll own the van, although it could be a few years old. If you choose to, you’ll be able to use the value of this van as a deposit towards your next vehicle to make sure your fleet stays up to date.

‍

• personal loan or personal contract purchase: a personal contract purchase is the same as a hire purchase, except the finance will be in your own name as opposed to being a form of commercial van finance. You’ll personally own the van at the end of your contract. A personal loan is the same, except there’s no limitations on what you can spend your money on. You’ll be able to choose to purchase a van for your business, alongside machinery or stock too. This makes a personal loan a very flexible option, although because it will be in your own name, be aware that they're likely to be personally guaranteed against your own possessions, such as your car or house.

‍

• business loan: If you want a van financing solution that offers the same level of flexibility as a personal loan, but is written in the name of your business, then a business loan could be what you’re looking for. An iwoca Flexi-Loan is a business loan that you could use to purchase a vehicle – borrow up to £500,000 to spend on a van of your choice and use it to expand your business into new areas, with no limitations on mileage holding you back. Choose to keep the money for up to two years and apply with a simple, paperless application that could see the money in your account the same day.