How to finance a van for your small business

When you’re running a small business, cashflow is often tight and it can be difficult to fund large purchases. For many small businesses, one of the largest purchases they’re likely to have to make is a new van. Whether you’re running a haulage firm or something much simpler, like a mobile hairdressing business, some form of commercial vehicle is going to be necessary to help you perform your daily functions.

Buying a commercial vehicle for your business can provide great advertising as well as giving a professional look and having associated tax relief. Finance, though, can be an issue. Fortunately, there are a number of flexible options open to small business owners when it comes to buying a new van or commercial vehicle.

The most common arrangement for financing a commercial vehicle is hire purchase. Essentially, you’ll pay a deposit when you first buy the vehicle, followed by regular monthly payments — usually spread across anything between 12 and 60 months. This allows you to budget with ease and has the added benefit that you’ll own the vehicle at the end of your hire purchase arrangement. This provides great flexibility for small businesses and has the added benefit that interest charges on the hire purchase agreement are allowable against tax.

Financing your business van

Financing your business van

If money is tight at the moment but you anticipate an upturn in business in the next couple of years — something which is particularly likely if you’re just starting out — a balloon hire purchase arrangement may be best for you. This is similar to the hire purchase system above, except that the monthly payments are lower and there’s a balloon payment at the end of the payment period (similar to your deposit at the start) which completes the value of the purchase and gives you full ownership of the vehicle. Again, interest charges are allowable against tax.

If ownership isn’t a concern for you, then you might want to consider a contract hire arrangement. This is essentially a lease deal, keeping all of your maintenance and service charges included in a simple monthly payment. What’s more, you won’t have any of the hassles of ownership, either, and can change your vehicle with ease at the end of the arrangement.

Whether you’re looking for a small Vauxhall Corsa van or a larger Fiat Scudo, whatever your situation there are plenty of options available for buying your new commercial vehicle.

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