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March 31, 2022 at 4:34 PM

 

When it comes to financing a new or used van, there are several different options available. So how do you choose the right deal for your needs? In this blog post, we'll take a look at some of the most common types of van finance deals and what you need to consider before signing up. We'll also provide tips on how to find the best deal for your budget. Read on to learn more!

Common Types of Van Finance Deals

  • Hire Purchase

As the name implies, hire purchase is a type of van financing where you hire the vehicle from the lender for a specific period until your monthly payments have been completed. The van is yours as soon as you have made your final payment.

Your monthly payments will depend on your preferences and your budget. This will allow you to budget more reliably over the next few years. Moreover, you will not be restricted to a certain number of miles per year. Both personal and business customers can take advantage of this type of van financing agreement.

  • Lease Purchase

This type of agreement is similar to hire purchase in that it gives you the option to own the car after the final payment has been made. The difference is that the monthly repayments are generally lower than that of hire purchase. Furthermore, at the end of the contract, you’ll have to pay the deferred sum—also called final balloon payment—to own the van.

  • Personal Contract Hire

Unlike hire purchase and lease purchase, you won’t own the van at the end of the agreement. Meaning, you’re essentially only renting the van. There’s also a mileage limit. Some use this type of van financing because it’s a cost-effective way of upgrading what they drive.

  • Business Contract Hire

Similar to personal contract hire, this type of van financing allows businesses to rent a van for an agreed period. With this business van finance deal, you’ll be able to drive the vehicle that is right for your business at a more cost-effective rate. Other benefits for businesses are it offers tax benefits and less administrative work.

  • Personal Contract Purchase

This is a van finance deal where you have the option to return the vehicle at the end of the term or pay a larger amount to take ownership of it. There’s also the option of exchanging the van for another vehicle. A mileage limit applies to this type of agreement.

  • Finance Lease

A finance lease is a flexible agreement that allows you to rent a van for an agreed period. At the end of the contract, you can either extend the lease or allow the vehicle to be sold. One of the advantages of this type of agreement is that no penalties will typically be charged for damage or excess mileage. A finance lease also provides tax benefits to a VAT-registered company.

  • Personal or Business Loans

Securing a personal or business loan is a straightforward way of financing a van. It involves paying the deposit and making monthly repayments for a set period at a fixed interest. However, if you fail to make the repayments, you risk losing the van.

Read another one of our articles about How to Buy a Used Car Without Getting Ripped Off here.

Things to Consider Before Signing Up for Van Finance Deals

  • Type of van

Whether you’ll be using it for personal or business use, ensure that your chosen van can meet your needs. A wide range of vans is available for lease or purchase, all varying in size and style. Aside from choosing the van’s size and style, also consider whether you prefer a new or used van. Read on the differences between petrol, diesel, hybrid, plug-in hybrid or electric vans here.

  • Budget

Consider your budget and the type of van finance deal you want. Know whether you intend to purchase the van outright or you want a lease contract with low monthly payments.

  • Flexibility of terms

The best van finance deal for you will depend on how much flexibility you want to have over the agreement terms. Would you like the option of being able to purchase the van at the end of the agreement? Also, consider whether you’d want to exchange the van for another. Another thing to consider is the mileage and whether you’d want to avoid being penalised for excess mileage.

  • Tax benefits

The tax implications for each type of agreement are different. Depending on the van finance type you choose, you can claim back VAT, which can be more cost-effective if you’re in the market for numerous vans.

  • Maintenance

Some van finance deals will cover repairs and servicing. For other finance types, you’ll be responsible for all things maintenance.

Tips on How to Find the Best Van Finance Deals for Your Budget

  • Pick the appropriate van

Plan everything you’ll need to do with the vehicle, and ensure that you pick the appropriate one for the job. Check out the models available. Then pick the van with the size and design that can best meet what you intend to use it for.

  • Improve credit rating

You might find it difficult to qualify for financing deals and get a good interest rate when you have a bad credit history. Maintaining a good credit rating is essential to up your chances of getting the best deals.

  • Take your time to shop around

You shouldn't just buy the first van you see. Instead, take your time to shop around and compare interest rates and terms to get the best deals for your budget.

  • Weigh the pros and cons of each van finance type

Consider whether you want to own the car or just rent it for a given period. Learn the terms and conditions, whether there are any mileage limits imposed or tax benefits you can get and the penalties or hidden charges involved.

  • Know your budget

Avoid overspending by knowing your budget and whether you’ll be able to afford the running costs of owning or hiring a car for a set period. It’s worth checking out a van finance calculator or consulting with your accountant for assistance.

Once you’re ready to drive off with your new van, read this article with Tips for Driving a Van For the First Time.

Used Van Finance in the UK

At Big Van World, we offer the best van finance deals on used vans with flexible terms and competitive interest rates. Contact us today to learn which finance package is the best for you.


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Category: Buying Guide