van finance
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THERE are many fields of small business in which growth and expanded reach are rendered more difficult or simply impossible without a van. A van gives you the mobility and carrying ability to deliver your services to the people who need them the most with speed and efficiency.

But when you’re running a business, the leasing or purchase of a vehicle is yet another overhead that needs to be reined in if you’re to retain the healthy cash flow that will allow you to operate at peak efficiency without needing to worry about unpaid vendors and other creditors who can bury your fledgling enterprise under an avalanche of debt.

While you could buy a battered old used vehicle at a reasonable cash price, it is unlikely to be a reliable workhorse for your business, nor will its rusty appearance prove appropriate representation for your emerging brand.

Key considerations

Your business has unique circumstances which will dictate which financing option for your new van works best for you. Thus, before you commit to a van finance option take a close look at your books and consider the following:

  • How much can your business spare to use as a deposit or advanced rental?
  • How much can you afford in your monthly cash flow for finance repayments?
  • Will the vehicle be financed under your name or through your business?
  • How healthy is your cash flow?
  • How credit worthy is your business?

These will play a large role in determining which of the following options is best for you…

Hire Purchase Agreements

Hire Purchase Agreements (HPAs) are perhaps the most common forms of vehicle financing. The good thing about HPAs is their inherent flexibility, meaning that you and your chosen dealership have latitude to work out a deal that is mutually beneficial. HPAs tend to last between 2-5 years with a typical length of 3 years. At the end of the agreement, the vehicle is yours or if you wish to invest in something newer you can part exchange the vehicle or sell it privately.

This is great for you if: You have a reasonable deposit to contribute to the cost of your van and have worked out an arrangement with your chosen dealer to make repayments which will facilitate ownership of your van without impeding cash flow.

Contract Purchase

Contract Purchase (CPs) are very similar to HPAs. Again, a deposit is paid and terms are arranged for repayment over an average period of 3-5 years. Unlike an HPA, a large chunk of the van’s value is deferred towards an optional final payment known as a “balloon payment”. At the end of your CP arrangement you can choose either to return the van to the dealer or pay your balloon payment to own it outright.

This is great for you if: You don’t mind the possibility of never owning your van and have a significant deposit yet want to keep your monthly payments low to facilitate cash flow.


Leasing or Contract Hire is another commonly chosen option for businesses who need a van yet don’t feel the need to own one of their own. When leasing a van, a contract length is determined, usually between 24 and 60 months and monthly rentals are agreed.

While an advanced rental is usually required, there are many options available. Another factor that makes leasing an attractive option is the tax advantage. Your monthly repayments are considered tax deductible expenses when you lease.

This is great for you if: You require flexibility in terms and repayments, want to take advantage of tax benefits and don’t mind never owning your van.

Business loans

Finally, some business owners choose to take out a business loan to pay the cost of the van upfront so that they can own it outright. That way, should the business need to go into liquidation or you are made bankrupt the van can be sold to offset some of the debts.

This is great for you if: You would prefer for your business to own its own van, you have a good relationship with your bank or lender and can get an advantageous interest rate.

Whichever option you choose, may it lead to a new period of growth and prosperity for your enterprise!



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