Van Finance for New Business

Helping your company hit the ground running

Van Finance for new business


Starting a new business in the UK is an exciting time, and for many entrepreneurs, it’s also a challenging period as they set the foundations for their company’s success. One crucial decision many business owners face is whether to purchase a van for their day-to-day operations. At First Oak Capital, we understand how vital it is to find the right van finance solution to help your new business hit the ground running. That’s why we’ve put together this comprehensive page on van finance for new businesses.

The Importance of a Van for New Businesses

A van is an invaluable asset for many types of businesses, such as:

  • Delivery and courier services
  • Construction, plumbing, or electrical companies
  • Landscaping and gardening businesses
  • Mobile catering services
  • Retail businesses for trade shows and events

A van allows your business to transport goods, tools, and equipment, and can also be used for advertising purposes when branded with your company logo and contact details. However, purchasing a van can be a significant expense, especially for a new business. That’s where van finance comes in, offering a range of options to make the process more manageable.

Types of Business Van Finance Options

There are several van finance options available for new businesses. Here, we will explore the most common types of finance to help you choose the best option for your needs:

Hire Purchase (HP)

Hire Purchase is a popular van finance option that allows you to spread the cost of the vehicle over a fixed period, typically between two and five years. With HP, you’ll pay an initial deposit, followed by monthly instalments. Once all the payments have been made, you’ll own the van outright.

Benefits of Hire Purchase:

  • Ownership at the end of the term
  • Fixed interest rates and monthly payments
  • No mileage restrictions

Finance Lease (FL)

A Finance Lease is a long-term rental agreement that allows you to use the van for a fixed period without actually owning it. At the end of the lease, you can either return the van, extend the lease, or sell the van and retain a portion of the proceeds.

Benefits of Finance Lease:

  • Lower monthly payments compared to Hire Purchase
  • Tax benefits, as monthly payments can be deducted as a business expense
  • No need to worry about the van’s resale value

Contract Hire (CH)

Contract Hire is a fixed-term rental agreement similar to Finance Lease but usually includes additional services, such as maintenance, breakdown cover, and replacement vehicles if necessary. At the end of the contract, you return the van, and there is no option to buy it.

Benefits of Contract Hire:

  • Fixed monthly payments, making budgeting easier
  • Inclusive of maintenance and breakdown cover
  • No depreciation risk or disposal concerns

Personal Contract Purchase (PCP)

Personal Contract Purchase is a flexible option that combines elements of Hire Purchase and Contract Hire. You pay a deposit and fixed monthly payments over a set period, and at the end of the term, you can choose to return the van, buy it for a pre-agreed amount (known as the ‘balloon payment’), or use the van’s value to part-exchange it for a new vehicle.

Benefits of Personal Contract Purchase:

  • Lower monthly payments due to the balloon payment at the end
  • Flexibility to choose between buying, returning, or upgrading the van
  • Option to own the van at the end of the term
Van finance for new business

Factors to Consider When Choosing Van Finance

When evaluating the different van finance options, it’s essential to consider the following factors:

Budget and cash flow

Assess your business’s budget and cash flow situation to determine how much you can afford for monthly payments and the initial deposit. Be realistic about your financial capabilities to avoid overcommitting and causing cash flow problems down the line.

Duration of van use

Consider how long you plan to use the van for your business. If you only need it for a short period, a Finance Lease or Contract Hire may be more suitable. However, if you intend to use the van for an extended period, Hire Purchase or Personal Contract Purchase might be a better fit, as they offer ownership options at the end of the term.

Mileage requirements

Different finance options come with various mileage restrictions. If your business requires high annual mileage, Hire Purchase may be a better choice, as it typically doesn’t have any mileage restrictions. In contrast, Finance Lease, Contract Hire, and Personal Contract Purchase often come with mileage limits, and you may face charges if you exceed them.

Maintenance and running costs

Factor in the cost of maintenance, servicing, and repairs when deciding on a finance option. With Contract Hire, these costs are often included in the monthly payments, making it easier to budget. However, with other finance options, you’ll need to budget for these expenses separately.

Tax implications

Each business van finance option has different tax implications. Finance Lease and Contract Hire monthly payments are usually tax-deductible as a business expense, while Hire Purchase and Personal Contract Purchase allow you to claim capital allowances on the van’s depreciation. It’s essential to consult with your accountant or tax advisor to determine the most tax-efficient option for your business.

Selecting the Right Van for Your Business

Before securing finance for your new business’s van, it’s crucial to choose the right vehicle to suit your company’s specific needs. Here are some factors to consider when selecting the perfect van:

  1. Size and payload capacity: Depending on the type of goods or equipment you’ll be transporting, consider the van’s size and payload capacity. Choose a van that can safely and efficiently carry your cargo without overloading it.
  2. Fuel efficiency: Fuel costs can add up quickly, so selecting a fuel-efficient van can save your business money in the long run. Consider both petrol and diesel options, as well as electric and hybrid vehicles, depending on your driving habits and route requirements.
  3. Brand reliability: Research the reputation and reliability of various van manufacturers. Choose a reputable brand known for producing reliable vehicles to minimise downtime and maintenance costs.
  4. Accessibility: Depending on the nature of your business, consider the accessibility of the van. Side and rear loading doors, as well as tail lifts or ramps, can make loading and unloading easier and more efficient.
  5. Customisation options: Some vans offer customisation options, such as shelving and storage systems, which can help organise your tools and equipment more effectively.
Van finance for new business

Understanding the Application Process

When applying for business van finance, it’s essential to be prepared and understand the process. Here are some steps to guide you through the application:

  1. Gather required documentation: Lenders will typically request financial documents, such as bank statements, profit and loss statements, and balance sheets. They may also require proof of business registration and identification documents for the business owner.
  2. Assess your credit score: Your credit score can affect the interest rates and terms you’ll be offered for van finance. Check your credit score and address any discrepancies or issues before applying for finance.
  3. Approach a finance broker: Working with a finance broker like First Oak Capital can streamline the application process and increase your chances of approval. We can help you find a suitable lender and guide you through the application process.
  4. Compare offers: It’s essential to compare the various van finance offers available to ensure you’re getting the best possible deal for your business. Consider factors such as interest rates, fees, and terms when comparing offers.
  5. Complete the application: Once you’ve chosen a lender, complete the application process and provide any additional information or documentation required.

Managing Your Van Finance Responsibly

Securing van finance is just the first step in ensuring your business’s success. Managing your van finance responsibly is crucial to maintaining a healthy cash flow and building a positive credit history. Here are some tips for managing your van finance:

  1. Make payments on time: To avoid late fees and potential damage to your credit score, ensure you make your monthly payments on time. Set up direct debits or reminders to help you stay on track.
  2. Regularly review your finance agreement: Keep track of your finance agreement’s terms, interest rates, and fees. If your business’s financial situation changes, it may be worth exploring refinancing options to secure better rates or more favourable terms.
  3. Maintain your van: Regular maintenance is crucial for keeping your van in good working order, minimising downtime, and preserving its value. Following the manufacturer’s recommended maintenance schedule and promptly addressing any issues can save you money in the long run.
  4. Monitor your business’s financial health: Regularly review your business’s cash flow, profit margins, and expenses to ensure you can continue to meet your van finance obligations comfortably. Adjust your budget and spending as needed to maintain financial stability.
  5. Plan for the future: As your business grows and evolves, your van finance needs may change. Continuously assess your company’s requirements and consider upgrading or expanding your fleet when necessary. Planning for the future can help you avoid unexpected costs and ensure your business remains competitive.
  6. Maintain open communication with your lender or broker: Keep your lender or broker informed of any changes in your business situation that may affect your ability to meet your van finance obligations. They may be able to offer assistance or alternative solutions if you encounter financial difficulties.
  7. Budget for insurance and taxes: Don’t forget to factor in the cost of insurance and taxes when budgeting for your van finance. Shop around for competitive insurance rates and consult with your accountant or tax advisor to ensure you’re aware of all relevant tax implications.
  8. Consider fuel management: Implementing a fuel management strategy can help you control and monitor your van’s fuel consumption, saving your business money in the long run. This could include route planning, driver training, and monitoring fuel usage.
Van finance for new business

Van Finance for Businesses with Poor Credit

If your new business has a limited credit history or you have poor personal credit, securing van finance may be more challenging. However, there are still options available to help you finance your commercial vehicle:

  1. Use a guarantor: A guarantor is someone who agrees to take responsibility for your loan if you’re unable to make the repayments. This can provide extra security for the lender and increase your chances of approval.
  2. Offer a larger deposit: Providing a larger deposit may help offset the perceived risk associated with lending to a borrower with poor credit. A larger deposit can also reduce your monthly payments and the total interest paid over the loan term.
  3. Improve your credit score: Taking steps to improve your credit score before applying for van finance can increase your chances of approval and secure better interest rates. This may include paying off outstanding debts, correcting errors on your credit report, and establishing a positive payment history.
  4. Consider alternative lenders: Some lenders specialize in providing finance for borrowers with poor credit. While these lenders may charge higher interest rates, they can offer a valuable solution for businesses with limited credit options.

How First Oak Capital Can Help Your New Business

As a leading finance broker in the UK, First Oak Capital is here to help your new business source the best rates for van finance. Our experienced team will guide you through the process, ensuring that you fully understand the various finance options available and choose the one that best suits your needs.

We work with a wide network of reputable lenders, which allows us to find competitive rates and terms for your van finance requirements. Whether you’re looking to finance a single van or an entire fleet, our team will work tirelessly to secure the best possible deal for your new business.


Investing in a van can significantly impact your new business’s success, allowing you to transport goods, tools, and equipment and even serve as a mobile advertisement. However, it’s crucial to choose the right van finance option to suit your business’s unique needs and circumstances.

Van Finance

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Matt Whiteman

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