Are you thinking of buying a vehicle for your business? Purchasing a vehicle can be an exciting and beneficial way to help drive business success – but it doesn’t come without its own set of challenges. So how does business vehicle finance work?
Finding the right model and make, understanding the different financing options, budgeting correctly and staying on top of maintenance are all part and parcel of owning a car or van that’s used in a working capacity.
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In this guide, we’re here to explain what UK businesses need to know about purchasing their next company vehicle – from setting up finance arrangements to taking care of ongoing expenses.
Best business car and van finance providers UK
| Vehicle finance lender | Minimum finance | Maximum finance | Finance terms |
|---|---|---|---|
Bluestar Leasing | £1,000 | N/A | Up to 7 years |
Cambridge & Counties Bank | £5,000 | N/A | 1 year – 6 years |
| £5,000 | £500,000 | 3 months – 18 months |
Close Motor Finance | £5,000 | N/A | 1 year – 6 years |
Funding Circle | £10,000 | £250,000 | 6 months – 5 years |
Funding Xchange | £5,000 | £250,000 | 1 year – 5 years |
Iwoca | £50,001 | £250,000 | 3 years |
Lombard Business Finance | £5,000 | £250,000 | 12 months – 84 months |
Love Finance | £5,000 | £500,000 | 18 months – 5 years |
Nationwide Finance | £8,000 | £500,000 | 1 year – 5 years |
Santander Finance | £5,000 | N/A | 1 year – 6 years |
Swoop | £5,000 | £2,000,000 | 1 month – 7 years |
Tide | £500 | £5,000,000 | 1 month – 6 years |
What is business vehicle finance?
Business vehicle finance is a form of loan or financing arrangement used to purchase vehicles for business purposes. It can be used to acquire cars, vans, fleet vehicles, and other types of commercial transport. This type of finance allows businesses to spread the cost of large purchases over a period of time instead of paying for them in one go.
What types of vehicle can you purchase using business vehicle finance?
Business vehicle finance can be used to purchase a variety of commercial vehicles, from light vans and cars to larger trucks. Depending on the type of business you run and the purpose of the vehicles you need, there are different types of business vehicles available. These include:
Vans
From small panel vans to large cargo vans, these vehicles are perfect for businesses that require transporting goods, materials or equipment.
Pickup trucks
These vehicles offer a combination of carrying capacity off-road performance. They ideal for tradespeople, such as plumbers or landscapers who need to take large amounts of tools with them to a job site.
Cars
Small cars are great for business owners who travel on a regular basis and require a vehicle with good fuel economy.
4x4s
These vehicles provide immense off-road capabilities, making them perfect for businesses that need to traverse muddy or uneven terrain.
Tractors
These powerful machines are perfect for businesses that need to tow heavy loads or move large amounts of materials.
What types of business vehicle finance are available in the UK?
The UK has a variety of business vehicle finance options available. These include:
Hire Purchase (HP)
This is the most common type of business vehicle financing used in the UK. It allows businesses to pay for their vehicles over a period of time, usually between two and five years. At the end of this period, businesses have the option to purchase the vehicle outright or enter into a new finance agreement.
Lease purchase (LP)
This type of business vehicle financing is similar to HP but usually allows for lower monthly payments. At the end of the term, businesses can choose to return their vehicles or continue paying until they own it outright.
Contract hire
This option allows businesses to pay a fixed monthly fee for the use of the vehicle. At the end of the term, they can choose to return it and lease another vehicle, or extend their contract.
Refinancing
This type of business vehicle finance is available for companies that already own vehicles but need to lower their monthly payments. It allows them to refinance the vehicle and pay off the remaining balance over a period of time.
No matter what type of business you run, there is likely to be a business vehicle finance option that suits your needs. Understanding the different options available will help you make an informed decision when it comes to purchasing.
How much does business vehicle finance cost?
The cost of business vehicle finance depends on a variety of factors, such as the type of finance option chosen, the age and condition of the vehicle, and the length of repayment terms. However, it is important to remember that this cost does not just include monthly payments; it also includes any fees or interest associated with the loan. To get an accurate estimate of how much your finance will cost, you should speak to a specialist lender. They will be able to provide you with a tailored quote based on your individual circumstances.
How to get the best business vehicle finance
How to get car finance for a business
- Research your options
Before you start looking for business vehicle finance, it is important to research the different types of finance available and understand which one best suits your needs. You should also compare rates from different lenders, so that you can be sure you are getting the best deal.
- Speak to a specialist lender
Once you have decided on the type of finance that is right for your business, it is time to speak with a specialist lender. They will be able to provide you with tailored advice and quotes based on your individual circumstances.
- Compare lenders
It is important to compare different lenders before making a final decision. This can help you ensure you are getting the best deal for your business vehicle finance needs.
- Read the terms and conditions
Before signing any loan agreement, make sure to read through all of the terms and conditions carefully. This will help you understand exactly what you are getting into and avoid any unpleasant surprises in the future.
- Repayment options
Discuss the repayment options available with your lender, as well as any early repayment fees. This will help you plan your budget and ensure that you can make the repayments on time.
FAQ
Yes, you can use business vehicle finance to purchase both new and second-hand vehicles. However, the loan terms may vary depending on the age or condition of the vehicle.
Most lenders will require proof of income, such as bank statements or pay slips. They may also ask for evidence of any existing debts or liabilities you have.
Some lenders only offer finance for certain types of vehicles, such as cars or vans. It is important to check with your lender before applying for finance to make sure they will accept the vehicle you are interested in purchasing.
Yes, many lenders offer business vehicle finance to sole traders. However, it is important to note that the terms of these loans may differ from those offered to larger businesses.
Most lenders will require you to borrow at least £1,000 in order to qualify for business vehicle finance. However, some lenders may have lower requirements. It is best to check with your lender before applying.
Missing payments could have serious consequences, including incurring additional fees and higher interest rates. If you think you will struggle to make repayments, it is important to contact your lender as soon as possible to discuss your options.
Business vehicle finance can be a great option for companies looking to purchase vehicles. It allows businesses to spread the cost of their purchase over time, which can make it easier to budget and manage cashflow. However, as with any financial decision, it is important to ensure you understand all the costs and terms of the loan before you commit.