Van Finance Guide - Which is right for me

HP/ Lease Purchase Finance Lease 12 Month Lease Contract Hire Long Term Rental
Credit Check
Deposit VAT Only 10% 1 Month 3 - 12 Months Damage Deposit
VAT Upfront
Final Payment No/ Yes
Settle Early
Buy at end
Resale profit
High spec vehicles
Modified vehicles
Damage penalty end?
Mileage penalty
Tax allowance 130% 130% 100% 100% 100%

Van Lease Purchase 

  • VAT down deposit but can be reclaimed if VAT registered 
  • Final payment or balloon at end to keep the payments low
  • Settle any time its an ownership scheme 
  • Great for strong stable VAT registered companies 

Finance Lease

  • 10% down typically 
    Very cheap payments 
  • No need to find VAT upfront. Pay it monthly reclaim quarterly 
  • Final payment or balloon at end keeps payment down 
  • Often supported by manufactures to achieve lowest payments highest discounts 

3, 6, 12 Month Lease

  • 1 payment upfront 
  • Low commitment 
  • High specification vehicles 
  • Opportunity to purchase at end in some cases 
  • Cannot settle early without penalty 

Van Hire Purchase

  • VAT down but can be reclaimed if VAT registered 
  • High monthly payments but paid off fast 
  • Settle at any time 
  • Great for strong stable VAT registered companies 
  • Often offered to finance lease declines 

Long Term Rental

  • Very expensive 
  • Great for bad credit customers 
  • Little commitment 
  • Insurance possible for some 
  • 1- 16 weeks most popular 
  • Basic vehicles 

Van Contract Hire

  • 1- 12 payments upfront 
  • Cannot settle early without penalty 
  • Damage and mileage inspection at the end 
  • Basic vehicles 
  • No disposal profits 
  • Cannot buy at end 
  • Suits all companies but simply for convenience. 
    Often winners and losers. 

Types of Van Finance On Offer

Van Hire Purchase 2022

Van Hire purchase is the most traditional way to purchase a van. There is currently 130% Supertax  incentive on this method, which means its a very effective way of minimising tax. You pay your VAT upfront so there is no VAT on the remaining payments. If of course you are VAT registered then this can be reclaimed in the next quarter.  There are more Van Hire Purchase companies than any other type of funder so of course its easier to get credit. It tends to favour good solid VAT registered companies that are cash rich. You automatically own the asset when the loan is paid off. You can take the whole purchase price against the van plus an extra 30% until March 2023. The only negative is high monthly payments hence its more for those who have the money anyway. 

Van Lease Purchase

Van Lease purchase is more or less hire purchase with a balloon at the end. This means its far more popular as it keeps the monthly payments down. Some manufacturers such as Volkswagen place great incentives on this type of funding and offer more discount. The total vehicle price can be taken against tax within one year to once again its a great way to keep Corporation tax down. Currently this too attracts 130% Supertax deduction. And once again you automatically own the asset after the final payment. 

Van Finance Lease

Van Finance lease is one of the most popular way to finance a van. It doesn’t require all the VAT to be placed upfront and can be settled off at any time without penalties. Typically a deposit of 10% is placed down. And then payments taken over up to 5 years. There is a large final payment or balloon as its often named at the end. The final payment is calculated as a percentage of what auction prices are predicted to be in the future based on the anticipated mileage of the vehicle and its condition. There are several finance companies that do not base their final values on CAP Future values but predict their own which means cheaper monthly payments. However we often see these customers in negative equity years on. This van finance method is firm favourite with new start companies since the tax savings are spread out over several years. At the end of the agreement is a final payment and the vehicle MUST be sold. The original purchaser CANNOT buy the vehicle. This isn’t to say that a third party such as a friend, accountant, or even Swiss Vans can buy the vehicle at the end and resell it back. This is often the case when people wish. to buy the old van to convert to a camper. Its simply a paperwork exercise. We charge £500 if you wish us to do this for you or refinance the end balloon. 

12 Month Van Lease

Very few companies offer a 12 month lease. Swiss Vans is one of the few that do. Typically you place one payment down though it can be more followed by 12 more payments. You insure the vehicle as normal and every penny comes off your tax bill. All the vehicles are under 12 months old and taxed for the duration. We only offer this product to existing customers with a vehicle already from us or customers within 25 Miles of Bridgend.  We may ask for you to provide a credit report. We also offer 3 month lease and 6 month lease. The vehicle needs to be returned in the same condition as it was collected. 

Van Contract Hire

Many  customers ask for van contract hire as they think there is no credit check and they suffer from bad credit. There is a credit check. This method of van finance best suits larger companies that want fleets of identical vehicles. To try and sell say 100 very basic vans in white all at the same in three years is difficult hence contract hire works best for this. You place a deposit of 3- 12 months in advance. You cannot sell early but potentially you can hand back the vehicle early if you meet 50% of the payments left. But this is at the finance companies discretion. And sales profit at the end goes to the finance company, hence they tend to push this heavily. Van Finance Lenders look to make profit on the old vehicle at auction which is setup for basic vehicles. So when a decent colour high spec vehicle goes through the auction the profits can be considerable for them. At the end any damage or excess mileage must be paid for so its win win for the van finance company. 

Long Term Rental

Some customers even large companies rent for long periods. It is an expensive method but it can work for some people. The cost of renting depends on how long the commitment is, and once you have decided you can’t change this without a large penalty. It can be with or without insurance. Its cheaper without. Swiss vans do long term rental as a white label at over 200 locations across the UK. Its meant more to help than be a serious long term offer. 

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