Van finance explained

Buying a van on finance can help you spread the cost over time without paying the whole amount upfront. There are several types of van finance available, so it’s important to understand how van financing works before applying.

Van finance explained

Buying a van on finance can help you spread the cost over time without paying the whole amount upfront. There are several types of van finance available, so it’s important to understand how van financing works before applying.

In this guide

What is van finance and how does it work?

With a van finance agreement, you can spread the cost of your new van over an agreed time, usually 24 to 60 months.

In this time, you’ll have full access to the van and make monthly payments until the finance is paid off. Depending on the type of finance, at the end of the agreement you may be able to:

  • Automatically become the van’s legal owner
  • Become the van’s legal owner by paying a one-off fee
  • Make the balloon payment to buy the van outright
  • Return the van to the finance company and finance a new one

We offer Conditional Sale (CS) agreements. With this type of finance, you automatically become the van’s legal owner when you make the final monthly payment.

How does van finance eligibility work?

Whether or not you can get approved for van finance depends on several factors, including:

  • Your credit history
  • Your credit rating
  • Your income and expenses

In this guide

What is van finance and how does it work?

With a van finance agreement, you can spread the cost of your new van over an agreed time, usually 24 to 60 months.

In this time, you’ll have full access to the van and make monthly payments until the finance is paid off. Depending on the type of finance, at the end of the agreement you may be able to:

  • Automatically become the van’s legal owner
  • Become the van’s legal owner by paying a one-off fee
  • Make the balloon payment to buy the van outright
  • Return the van to the finance company and finance a new one

We offer Conditional Sale (CS) agreements. With this type of finance, you automatically become the van’s legal owner when you make the final monthly payment.

How does van finance eligibility work?

Whether or not you can get approved for van finance depends on several factors, including:

  • Your credit history
  • Your credit rating
  • Your income and expenses

You may find it difficult to get approved if you have a low credit score, limited credit history, or are self-employed and have an inconsistent income. A poor credit score can also make it harder to get accepted because some lenders may see you as a higher risk.

You may find it difficult to get approved if you have a low credit score, limited credit history, or are self-employed and have an inconsistent income. A poor credit score can also make it harder to get accepted because some lenders may see you as a higher risk.

Having bad credit doesn’t mean every lender will reject you. At Moneybarn, we specialise in bad credit van finance, so we may be able to help you even if other finance companies have rejected you or you have a CCJ or IVA.

Use our easy online form to get a quote for van finance.

Credit checks for van finance

When you get a quote, we use a soft credit check, which won’t affect your credit score. If you decide you’d like a van finance agreement with us, we’ll do a hard credit check to make sure you can afford the fixed monthly payments.

Having bad credit doesn’t mean every lender will reject you. At Moneybarn, we specialise in bad credit van finance, so we may be able to help you even if other finance companies have rejected you or you have a CCJ or IVA.

Use our easy online form to get a quote for van finance.

Credit checks for van finance

When you get a quote, we use a soft credit check, which won’t affect your credit score. If you decide you’d like a van finance agreement with us, we’ll do a hard credit check to make sure you can afford the fixed monthly payments.

We use a soft credit check at the point of application

When you get a quote, we use a soft credit check, which won’t affect your credit score. If you decide you’d like a van finance agreement with us, we’ll do a hard credit check to make sure you can afford the fixed monthly payments.

We use a soft credit check at the point of application

When you get a quote, we use a soft credit check, which won’t affect your credit score. If you decide you’d like a van finance agreement with us, we’ll do a hard credit check to make sure you can afford the fixed monthly payments.

Other lenders may use a hard credit check

Some lenders do a hard check when you apply, which will show up on your credit file and can impact your credit score. Read more about the two types of credit search in our ‘Soft search vs hard search credit check‘ guide.

Other lenders may use a hard credit check

How much does van finance cost?

The amount you’ll pay for van finance depends on factors including:

  • The amount you want to borrow
  • The length of the agreement
  • The type of finance agreement
  • The interest rate (APR) you’re offered

Spreading the cost over a longer term can reduce the monthly payments, but it does mean you’ll have to pay more interest over the term of the agreement.

The interest rates you are offered can vary based on your credit score. If you have bad credit, e.g. because you have missed payments before, lenders may see you as a higher risk and charge more interest.

Use our van finance calculator to see what your repayments could look like.

Can you reduce monthly van finance payments?

There are no ways to pay less than what you owe on van finance, but there are things you can do to reduce your monthly payments. These include:

Some lenders do a hard check when you apply, which will show up on your credit file and can impact your credit score. Read more about the two types of credit search in our ‘Soft search vs hard search credit check‘ guide.

How much does van finance cost?

The amount you’ll pay for van finance depends on factors including:

  • The amount you want to borrow
  • The length of the agreement
  • The type of finance agreement
  • The interest rate (APR) you’re offered

Spreading the cost over a longer term can reduce the monthly payments, but it does mean you’ll have to pay more interest over the term of the agreement.

The interest rates you are offered can vary based on your credit score. If you have bad credit, e.g. because you have missed payments before, lenders may see you as a higher risk and charge more interest.

Use our van finance calculator to see what your repayments could look like.

Can you reduce monthly van finance payments?

There are no ways to pay less than what you owe on van finance, but there are things you can do to reduce your monthly payments. These include:

One

Borrowing the money over a longer period.

Two

Putting down a larger deposit to reduce your loan amount.

Three

Make a partial early settlement during your agreement.

One

Borrowing the money over a longer period.

Two

Putting down a larger deposit to reduce your loan amount.

Three

Make a partial early settlement during your agreement.

Find out more about how a deposit affects finance with our guide.

What are the different types of van finance?

There are many different types of van finance, so you need to understand your options and how they differ to find the best deal for you.

Find out more about how a deposit affects finance with our guide.

What are the different types of van finance?

There are many different types of van finance, so you need to understand your options and how they differ to find the best deal for you.

One

Conditional Sale agreements (CS)

This is the type of finance we offer. It helps people to legally own the van at the end of the agreement, with no additional fee or payment needed.

Two

Personal Contract Purchase (PCP)

PCP offers more flexibility at the end of the agreement. You’ll have 3 options, including returning the van or making a balloon payment to legally own the van.

Three

Hire Purchase finance agreements (HP)

HP is often confused with CS. However, there is a key difference between them. With HP, you must pay the option to purchase fee to legally own the van.

Four

Personal Contract Hire (PCH)

PCH is also known as leasing. It lets you drive a new van with the latest tech. However, there is no option to legally own the van when the lease ends.

One

Conditional Sale agreements (CS)

This is the type of finance we offer. It helps people to legally own the van at the end of the agreement, with no additional fee or payment needed.

Two

Personal Contract Purchase (PCP)

PCP offers more flexibility at the end of the agreement. You’ll have 3 options, including returning the van or making a balloon payment to legally own the van.

Three

Hire Purchase finance agreements (HP)

HP is often confused with CS. However, there is a key difference between them. With HP, you must pay the option to purchase fee to legally own the van.

Four

Personal Contract Hire (PCH)

PCH is also known as leasing. It lets you drive a new van with the latest tech. However, there is no option to legally own the van when the lease ends.

Conditional Sale (CS)

Conditional Sale (CS)

We offer Conditional Sale van finance.

On a CS plan, you’re the van’s registered keeper for the duration of the agreement. You become the legal owner when you make your final payment.

At the start of your agreement, you put down a deposit, and we pay the dealership for you. You then make monthly payments until the amount you borrowed is paid off, plus interest.

Our CS agreements last 36 to 60 months, and we can finance a range of van types as well as well as the most popular van brands.

Once you make your final payment, we’ll transfer legal ownership of the van to you, with no extra fee or payment required.

Conditional Sale van finance diagram

We offer Conditional Sale van finance.

On a CS plan, you’re the van’s registered keeper for the duration of the agreement. You become the legal owner when you make your final payment.

Conditional Sale van finance diagram

At the start of your agreement, you put down a deposit, and we pay the dealership for you. You then make monthly payments until the amount you borrowed is paid off, plus interest.

Our CS agreements last 36 to 60 months, and we can finance a range of van types as well as well as the most popular van brands.

Once you make your final payment, we’ll transfer legal ownership of the van to you, with no extra fee or payment required.

Advantages and disadvantages of Conditional Sale

Advantages and disadvantages of Conditional Sale

There are no mileage limits like other types of van finance like PCP.

Monthly payments for CS may be higher than other van finance types.

You’ll legally own the van at the end of the agreement with no extra fee.

You won’t legally own the van until the final payment is made.

There are no late payment charges or hidden fees during your agreement.

The van could be repossessed if you can’t make the monthly payments.

Your interest rate is fixed, so your payments are the same each month.

You can’t sell or modify the van without the lender’s permission.

There are no mileage limits like other types of van finance like PCP.

You’ll legally own the van at the end of the agreement with no extra fee.

There are no late payment charges or hidden fees during your agreement.

Your interest rate is fixed, so your payments are the same each month.

Monthly payments for CS may be higher than other van finance types.

You won’t legally own the van until the final payment is made.

The van could be repossessed if you can’t make the monthly payments.

You can’t sell or modify the van without the lender’s permission.

Personal Contract Purchase (PCP)

Personal Contract Purchase (PCP)

Personal Contract Purchase (PCP) lets you pay an initial deposit and then take out a loan to cover the vehicle’s depreciation.

To work out your monthly payments, the lender will calculate the van’s Guaranteed Minimum Future Value (GMFV) at the start of the agreement. This means you don’t need to make up any shortfall if the van’s value falls quicker than expected.

At the end of the contract, which is usually between 24 and 60 months, you’ll have 3 options:

  • Keep the van by making the final balloon payment
  • Return your van and end the agreement
  • Trade your van in and start a new deal

PCP lets you choose what to do at the end of the agreement. This may be useful if you’re not sure whether you want to legally own the van.

Van

Personal Contract Purchase (PCP) lets you pay an initial deposit and then take out a loan to cover the vehicle’s depreciation.

Van

To work out your monthly payments, the lender will calculate the van’s Guaranteed Minimum Future Value (GMFV) at the start of the agreement. This means you don’t need to make up any shortfall if the van’s value falls quicker than expected.

At the end of the contract, which is usually between 24 and 60 months, you’ll have 3 options:

  • Keep the van by making the final balloon payment
  • Return your van and end the agreement
  • Trade your van in and start a new deal

PCP lets you choose what to do at the end of the agreement. This may be useful if you’re not sure whether you want to legally own the van.

Advantages and disadvantages of Personal Contract Purchase

Advantages and disadvantages of Personal Contract Purchase

You can keep, swap, or return the van at the end of the agreement.

You only legally own the van if you make the final balloon payment.

Monthly payments are often lower than other types of van finance.

There is a pre-agreed mileage limit, with charges if you exceed it.

As the lender calculates the GMFV, you won’t worry about depreciation.

Returning the van with damage will incur additional charges.

Some lenders may be able to refinance the balloon payment later on.

If you want to end your agreement early, there may be extra fees incurred.

You can keep, swap, or return the van at the end of the agreement.

Monthly payments are often lower than other types of van finance.

As the lender calculates the GMFV, you won’t worry about depreciation.

Some lenders may be able to refinance the balloon payment later on.

You only legally own the van if you make the final balloon payment.

There is a pre-agreed mileage limit, with charges if you exceed it.

Returning the van with damage will incur additional charges.

If you want to end your agreement early, there may be extra fees incurred.

Hire Purchase (HP)

Hire Purchase (HP)

On a Hire Purchase (HP) deal (sometimes known as a business lease purchase agreement), you borrow the total value of the van and repay it in fixed monthly instalments, usually over 12 to 60 months.

You may need to put down a deposit before you start a HP contract, but this is subject to affordability.

Unlike PCP plans, there is no balloon payment if you want to own the vehicle at the end of the agreement.

There is an ‘option to purchase’ fee, but this is usually a small amount, and if you don’t want to keep the van, you don’t have to pay it.

White vans parked

On a Hire Purchase (HP) deal (sometimes known as a business lease purchase agreement), you borrow the total value of the van and repay it in fixed monthly instalments, usually over 12 to 60 months.

White vans parked

You may need to put down a deposit before you start a HP contract, but this is subject to affordability.

Unlike PCP plans, there is no balloon payment if you want to own the vehicle at the end of the agreement.

There is an ‘option to purchase’ fee, but this is usually a small amount, and if you don’t want to keep the van, you don’t have to pay it.

Advantages and disadvantages of Hire Purchase

Advantages and disadvantages of Hire Purchase

There isn’t a mileage limit on most HP van finance agreements.

You must pay the option to purchase fee before you legally own the van.

Once you’ve paid the option to purchase fee, you’ll legally own the van.

Monthly payments on HP finance are often more than PCP.

Unlike PCP, there is no balloon payment at the end of your agreement.

The van could be repossessed if you can’t make the monthly payments.

HP deals have a fixed interest rate so your monthly payments are the same.

HP agreements don’t usually include servicing or maintenance plans.

There isn’t a mileage limit on most HP van finance agreements.

Once you’ve paid the option to purchase fee, you’ll legally own the van.

Unlike PCP, there is no balloon payment at the end of your agreement.

HP deals have a fixed interest rate so your monthly payments are the same.

You must pay the option to purchase fee before you legally own the van.

Monthly payments on HP finance are often more than PCP.

The van could be repossessed if you can’t make the monthly payments.

HP agreements don’t usually include servicing or maintenance plans.

Personal Contract Hire (PCH)

Personal Contract Hire (PCH)

A Personal Contract Hire (PCH) agreement is also known as van leasing or a business contract hire plan.

This lets you use a brand-new or nearly new van, but you’ll never legally own it.

A PCH deal is a lease agreement that usually lasts between 24 and 48 months. When the van leasing deal ends, you return the van without the option to buy it.

On a PCH deal, you pay the leasing company an initial rental fee to secure the agreement.

Van leasing is popular with business customers because it lets them drive a new van with the latest technology, and they may be able to claim back 100% of the tax as the vehicle is considered an ‘ongoing expense’.

Van Finance Portsmouth

A Personal Contract Hire (PCH) agreement is also known as van leasing or a business contract hire plan.

This lets you use a brand-new or nearly new van, but you’ll never legally own it.

Van Finance Portsmouth

A PCH deal is a lease agreement that usually lasts between 24 and 48 months. When the van leasing deal ends, you return the van without the option to buy it.

On a PCH deal, you pay the leasing company an initial rental fee to secure the agreement.

Van leasing is popular with business customers because it lets them drive a new van with the latest technology, and they may be able to claim back 100% of the tax as the vehicle is considered an ‘ongoing expense’.

Advantages and disadvantages of Personal Contract Hire

Advantages and disadvantages of Personal Contract Hire

Leasing allows you to own a brand new van with the latest tech.

You will never be able to legally own the van at the end of the lease period.

Many leasing options also include servicing and maintenance plans.

The initial rental payment is often higher than a deposit for van finance.

You won’t have to worry about van depreciation as you do not own it.

There is usually a mileage limit with additional charges for exceeding it.

PCH gives the flexibility to change your van as often as you like.

You may be charged extra if the van is returned with excess wear and tear.

Leasing allows you to own a brand new van with the latest tech.

Many leasing options also include servicing and maintenance plans.

You won’t have to worry about van depreciation as you do not own it.

PCH gives the flexibility to change your van as often as you like.

You will never be able to legally own the van at the end of the lease period.

The initial rental payment is often higher than a deposit for van finance.

There is usually a mileage limit with additional charges for exceeding it.

You may be charged extra if the van is returned with excess wear and tear.

Other ways of buying a van

Financing or leasing a van aren’t the only options. There is no single best way to buy a van, as it depends on your circumstances, how much you can afford, and whether you want to own it legally or not.

Other ways of buying a van

Financing or leasing a van aren’t the only options. There is no single best way to buy a van, as it depends on your circumstances, how much you can afford, and whether you want to own it legally or not.

One

Paying with cash

Buying a van with cash means you can pay the total amount upfront. This means there are no monthly instalments and it would be cheaper than van finance because you don’t have to pay any interest.

You would also become the van’s legal owner straight away, so you could modify or sell the van as you wish.

You need a lot of money to buy a van outright, and you can only buy what you can afford.

This is why some people choose van finance because it lets them spread the cost of a more expensive van over a few years.

Two

Personal loan

Buying a van with a loan from a bank or building society lets you become the vehicle’s legal owner straight away and spread the cost over a few years.

If you buy the van through your business, banks may offer preferential rates, meaning you could pay less interest than you would on a van finance deal.

Van loans can be used to buy vehicles from private sellers, giving you a larger pool of vans to choose from.

With van leasing and finance deals, you can usually only buy from approved dealerships.

Three

Apply with a partner

Guarantor van finance options require a friend or family member to step in and pay for the finance if you can’t. When you apply for guarantor finance, lenders will look at you and the guarantor. This may improve your chances of being approved if you have bad credit.

We don’t offer the option of having a guarantor on your van finance agreement. But if you have bad credit, we might be able to help. We have over 30 years of experience in helping people up and down the UK onto a better road ahead.

We also offer joint finance, so if you’re looking to apply with a partner or someone in your household, we could help.

Four

Credit card

Credit card purchases between £100 and £30,000 are protected under Section 75 of the Consumer Credit Act.

However, some van dealers charge a credit card handling fee, and others may not accept credit cards at all, limiting the number of vans available.

Interest rates on credit cards can be higher than those on other types of van finance and loans. Using a credit card to buy a van can also impact your credit score if you miss any repayments.

Read more about credit ratings in the guides below:

One

Paying with cash

Buying a van with cash means you can pay the total amount upfront. This means there are no monthly instalments and it would be cheaper than van finance because you don’t have to pay any interest.

You would also become the van’s legal owner straight away, so you could modify or sell the van as you wish.

You need a lot of money to buy a van outright, and you can only buy what you can afford.

This is why some people choose van finance because it lets them spread the cost of a more expensive van over a few years.

Two

Personal loan

Buying a van with a loan from a bank or building society lets you become the vehicle’s legal owner straight away and spread the cost over a few years.

If you buy the van through your business, banks may offer preferential rates, meaning you could pay less interest than you would on a van finance deal.

Van loans can be used to buy vehicles from private sellers, giving you a larger pool of vans to choose from.

With van leasing and finance deals, you can usually only buy from approved dealerships.

Three

Apply with a partner

Guarantor van finance options require a friend or family member to step in and pay for the finance if you can’t. When you apply for guarantor finance, lenders will look at you and the guarantor. This may improve your chances of being approved if you have bad credit.

We don’t offer the option of having a guarantor on your van finance agreement. But if you have bad credit, we might be able to help. We have over 30 years of experience in helping people up and down the UK onto a better road ahead.

We also offer joint finance, so if you’re looking to apply with a partner or someone in your household, we could help.

Four

Credit card

Credit card purchases between £100 and £30,000 are protected under Section 75 of the Consumer Credit Act.

However, some van dealers charge a credit card handling fee, and others may not accept credit cards at all, limiting the number of vans available.

Interest rates on credit cards can be higher than those on other types of van finance and loans. Using a credit card to buy a van can also impact your credit score if you miss any repayments.

Read more about credit ratings in the guides below:

What is the best way to buy a van?

The best way to buy a van will depend on personal factors, such as:

  • Your current financial situation and if it’s likely to change
  • The van you want to buy and its age, condition, price and features
  • How you will use the van
  • If you want to modify or sell the van

Van finance deals let you buy vehicles you may not otherwise be able to afford and spread the cost over an agreed time.

Paying for a van in cash means you won’t be tied to any monthly payments, but it means you’ll have to pay a large sum upfront.

What to consider before financing a van

Before you buy a new van, make sure you can comfortably afford the repayments and other costs, such as maintenance, insurance, and fuel.

Only sign an agreement once you fully understand it and are happy with the terms and conditions.

Finance your next van with Moneybarn

Buying a van on finance with Moneybarn lets you get the support you need to live and work freely

We have over 30 years of experience, so if you’ve been rejected before, we may be able to help.

To get van finance, you’ll need:

  • Monthly earnings over £1,000 (after tax)
  • To be aged between 20 and 75
  • A full, valid UK driving licence
  • 2 consecutive months of payslips
  • To put down a deposit (subject to affordability)

We can finance vans that meet our lending criteria:

  • Priced between £4,000 and £35,000
  • Up to 125,000 miles on the clock
  • No older than 12 years by the end of the agreement

Use our van finance calculator to find out what your Conditional Sale agreement could look like. Then, when you’re ready, get a personalised quote in less than 5 minutes.

We use a soft search at the point of application, which doesn’t affect your credit score. We only run a hard search once you’ve decided you’d like an agreement with us.

What is the best way to buy a van?

The best way to buy a van will depend on personal factors, such as:

  • Your current financial situation and if it’s likely to change
  • The van you want to buy and its age, condition, price and features
  • How you will use the van
  • If you want to modify or sell the van

Van finance deals let you buy vehicles you may not otherwise be able to afford and spread the cost over an agreed time.

Paying for a van in cash means you won’t be tied to any monthly payments, but it means you’ll have to pay a large sum upfront.

What to consider before financing a van

Before you buy a new van, make sure you can comfortably afford the repayments and other costs, such as maintenance, insurance, and fuel.

Only sign an agreement once you fully understand it and are happy with the terms and conditions.

Finance your next van with Moneybarn

Buying a van on finance with Moneybarn lets you get the support you need to live and work freely

We have over 30 years of experience, so if you’ve been rejected before, we may be able to help.

To get van finance, you’ll need:

  • Monthly earnings over £1,000 (after tax)
  • To be aged between 20 and 75
  • A full, valid UK driving licence
  • 2 consecutive months of payslips
  • To put down a deposit (subject to affordability)

We can finance vans that meet our lending criteria:

  • Priced between £4,000 and £35,000
  • Up to 125,000 miles on the clock
  • No older than 12 years by the end of the agreement

Use our van finance calculator to find out what your Conditional Sale agreement could look like. Then, when you’re ready, get a personalised quote in less than 5 minutes.

We use a soft search at the point of application, which doesn’t affect your credit score. We only run a hard search once you’ve decided you’d like an agreement with us.

Self-employed? We can help

If you’re looking to finance a van as a self-employed person, it can be tricky to get approved. Find out how we could help you.

Financing a Ford van

Ford is a brand synonymous with reliable vans. Our van finance helps you to spread the cost of your new Ford over time.

Our application process

It is important to completely understand the van finance agreement that you may be entering. Find out more about our process.