Limited Company van finance

How Limited Company Van Financing works for you

Introduction

Welcome to our comprehensive guide on limited company van finance! If you are a business owner in need of a van for your company, you have come to the right place. We understand the importance of having a reliable and efficient van to support your business operations. In this guide, we will explore the world of limited company van finance, including various financing options, advantages, and important factors to consider when choosing the right solution for your business. Let’s dive in!

What is Limited Company Van Finance?

Limited company van finance refers to financing options specifically designed for businesses registered as limited companies to acquire vans for their operations. These options help businesses to acquire new or used vans without bearing the full upfront cost, instead allowing them to pay over time through monthly installments or lease payments. There are several financing options available to limited companies, including hire purchase, finance lease, and contract hire.

Types of Limited Company Van Finance

1. Hire Purchase: Hire purchase is a popular option for businesses looking to own the van outright at the end of the finance agreement. In a hire purchase agreement, the business makes an initial deposit (usually around 10-20% of the van’s value), followed by fixed monthly payments over a specified term, typically ranging from 2 to 5 years. Once the final payment is made, the business becomes the owner of the van.
2. Finance Lease: A finance lease is another option for limited companies, particularly for those not looking to own the van outright. Under a finance lease agreement, the finance company purchases the van on behalf of the business and then leases it back to the business for a fixed period. The business makes monthly lease payments, and at the end of the lease term, the business can either continue leasing the van, purchase it at a pre-agreed residual value, or return it and enter into a new lease for a different van.
3. Contract Hire: Contract hire is a form of operational leasing, where the business hires the van for a fixed period without the option to purchase it at the end of the term. This option is suitable for businesses looking for a hassle-free, fixed-cost solution, as maintenance and servicing costs are often included in the monthly payments. At the end of the contract, the business returns the van and can enter a new contract for a new van.

For more information on van finance for a new business click here.

Advantages of Limited Company Van Finance

1. Improved Cash Flow: By financing a van instead of purchasing it outright, businesses can preserve cash flow for other essential operations, such as marketing, staff salaries, and inventory.
2. Tax Benefits: Limited company van finance can provide tax benefits, as lease payments and interest on hire purchase agreements can be deducted as business expenses. Additionally, vans purchased under a finance lease or hire purchase agreement may qualify for capital allowances, which can further reduce a company’s tax liability.
3. Flexibility: Financing options provide businesses with the flexibility to choose the most suitable van for their needs and budget, even for new companies. They can also upgrade to a newer model at the end of the lease term without having to worry about selling the old van.
4. Maintenance and Servicing: In contract hire agreements, maintenance and servicing costs are often included in the monthly payments, making it easier for businesses to budget and manage vehicle-related expenses.

Factors to Consider When Choosing Limited Company Van Finance

1. Business Requirements: Consider your business’s specific needs, such as the type of van, mileage requirements, and the length of the finance term, to determine which financing option is best suited for your company.
2. Budget: Analyse your business’s budget to decide the most affordable option, taking into account monthly payments, deposits, and any additional fees, such as maintenance and servicing costs. It is crucial to choose a financing option that aligns with your business’s financial capabilities to avoid straining your cash flow.
3. Ownership: Determine whether owning the van at the end of the finance term is essential for your business. If ownership is crucial, opt for a hire purchase agreement. If you prefer flexibility and do not require ownership, a finance lease or contract hire may be more suitable.
4. Tax Implications: Consult with a tax professional to understand the specific tax benefits associated with each financing option. This will help you make an informed decision based on the potential tax savings for your limited company.
5. Resale Value: If you plan to sell the van after the finance term, consider the van’s potential resale value. Vans with a strong resale value may be more cost-effective in the long run, particularly under a hire purchase agreement.
6. Finance Provider: Research and compare finance providers, taking into account their reputation, customer reviews, and the terms and conditions of their financing options. Choose a provider that offers competitive rates and a high level of customer service.

Conclusion

Limited company van finance is an excellent solution for businesses in need of a van to support their operations. By understanding the various financing options, advantages, and factors to consider when choosing the right solution, you can make an informed decision that aligns with your business’s needs, budget, and long-term goals. Whether you opt for hire purchase, finance lease, or contract hire, limited company van finance can help your business thrive by providing a reliable and efficient van without the burden of significant upfront costs.

Partnering With a Business Van Finance Specialist

Business financing specialists such as the team at First Oak Capital can help you find the right limited company van finance product for your business’s needs. Get in touch with our team at 0800 066 3677 or get a quote to get started today!