If you’re self-employed and looking to purchase a van in the UK, you may feel that financing your purchase will be difficult. However, finance is still possible for those self-employed. There are several van financing options available, each with its own advantages and disadvantages. In this article, we’ll explore the top five van financing options available in the UK to help you find the best option to suit your needs. By carefully considering your financial situation and researching these options, you can make an informed decision and secure the financing you need to purchase your van.
- Hire Purchase (HP)
Hire purchase (HP) is one of the most common ways to finance a van purchase in the UK. With HP, you pay a deposit (usually around 10% of the van’s value) and then make monthly payments over a set period (usually between one and five years) to cover the remaining cost of the van. Once you’ve made all the payments, you own the van outright.
HP can be a good option if you want to spread the cost of your van over a longer period, as it typically offers lower monthly payments than other types of finance. However, it’s important to keep in mind that you won’t own the van until you’ve made all the payments, and you’ll be responsible for maintaining and insuring it during that time.
- Personal Contract Purchase (PCP)
Personal contract purchase (PCP) is similar to HP in that you make monthly payments over a set period to cover the cost of the van. However, with PCP, you have the option to either hand the van back at the end of the agreement or pay a final balloon payment to own the van outright.
PCP can be a good option if you want lower monthly payments and the flexibility to decide whether to keep the van at the end of the agreement. However, it’s important to keep in mind that if you decide to hand the van back, you’ll need to ensure it’s in good condition and has not exceeded the agreed mileage limit.
- Lease Purchase
Lease purchase is similar to HP in that you make monthly payments over a set period to cover the cost of the van. However, with lease purchase, you have the option to either pay a final balloon payment to own the van outright or return the van to the finance company.
Lease purchase can be a good option if you want lower monthly payments and the option to own the van at the end of the agreement. However, it’s important to keep in mind that if you decide to return the van, you’ll be responsible for ensuring it’s in good condition and has not exceeded the agreed mileage limit.
- Personal Loan
If you have a good credit score, you may be able to take out a personal loan to finance your van purchase. With a personal loan, you borrow a set amount of money and then make fixed monthly payments over a set period to repay the loan.
Personal loans can be a good option if you want to own the van outright from the start and have the flexibility to choose your own insurance and maintenance providers. However, it’s important to keep in mind that you’ll need to have a good credit score to qualify for the best rates, and you’ll be responsible for maintaining and insuring the van yourself.
- Finance Lease
Finance lease is a type of van leasing that allows you to use the van for a set period (usually between two and five years) and make fixed monthly payments. At the end of the agreement, you can either return the van to the finance company or continue to use it for a further period by paying a “peppercorn” rental.
Finance lease can be a good option if you want lower monthly payments and the flexibility to choose your own insurance and maintenance providers. However, it’s important to keep in mind that you won’t own the van at any point during the agreement, and you’ll be responsible for maintaining it and returning it until the conclusion of the lease, in good condition.
It’s also worth noting that finance lease is often used by businesses rather than individuals, as it offers certain tax benefits. If you’re self-employed, a finance lease may be an attractive option for you, as it allows you to use the van for your business without having to tie up capital in the purchase.
Final Thoughts
When it comes to financing a van in the UK, there are multiple options available, each with their own advantages and disadvantages. Which one you choose will depend on your unique circumstances and preferences. Before deciding, it’s important to research and compare different options, taking into account your credit score and financial situation. Remember to read the terms and conditions carefully to fully understand the costs involved, so you can make an informed decision and enjoy your new van with confidence.