IF you’re not lucky enough to win van – such as David Mellors (pictured) who took the keys to an all-new Vauxhall Vivaro – then hire purchase, or HP, is worth investigating for your new van.
David won his brand new Vivaro Sportive L1H1 2700 1.6 CDTi van in a nationwide competition run in conjunction with TradePoint, B&Q’s trade arm and provider of building supplies.
But for the rest of us, it’s a question of what other finance options are available to get a new van.
Buying a van on hire purchase
The low down on hire purchase
Advantages:
- A very simple method of finance;
- You can claim capital allowances from the date of delivery
- Good for sole traders and small businesses not wanting a business type loan or van finance
- If the payment instalments are becoming too onerous, you can cancel the agreement in writing and return the van if you are more than halfway through the agreement – but check with Citizens Advice before you take such action
Disadvantages:
- You don’t own the van until the last payment
- It’s an on balance sheet form of finance
- There is no guarantee of the value of the vehicle at the end of the agreement;
- All the VAT element of the purchase must be paid up front
- Monthly payments are high
Hire purchase is a term everyone is familiar with and basically means you agree to buy the vehicle over a set period – normally three years – by paying agreed monthly instalments as though you were hiring it, although you are also buying it.
When you make the last payment the van is yours to carry on using or to sell on.
Stating the obvious, you are responsible for its maintenance as well as insurance and road tax (VED) while making the hire purchase payments.
The tax man treats hire purchase as a deferred purchase agreement rather than a hire agreement so for corporation tax purposes the van is deemed to belong to you from delivery, so you can claim capital allowances as if you had paid for it in full on delivery.
Vauxhall has a useful hire purchase off on its vans. Called 4x4x4x4 it gives four years’ 0% APR Representative finance, four years’ free servicing up to 80,000 miles, four years’ roadside assistance and four years’ warranty (up to 120,000 miles on Vivaro).
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