A van will cost a lot of money, but you can pay for it fully over time. To finance a van, buyers will benefit from a variety of payment options. Van financing is a good option, even though there are unexpected costs along the way due to damage and wear and tear.
Many people who live the van life believe that financing is the best option. Finding a van that is worth your money is now incredibly simple with the assistance of reputable lenders. Additionally, they demonstrate smart financial planning for getting a van. Used Van Finance Deals are indeed good for your budget.
What is Van Finance?
In the UK, van financing is in high demand for both personal and business use. People who are unable to pay for the vehicle all at once gain from it.
The market for the best van finance deals is growing. Some options do not even require a deposit which can be a good alternative to those with limited budgets.
Van finance gives you the freedom to pay for a brand-new van every month, depending on the agreement, so it won’t break the bank. The cost will include an interest rate that varies from lender to lender. Here are the requirements to finance a van:
- Must be a resident for at least a year before the purchase.
- A person that is self-employed and earns not less than 1,000 bucks monthly.
- Can show a temporary permit if there is no driver’s license yet.
Types of Van Financing
There are two ways to finance a van in the UK. Because each method can guarantee buyer convenience, choose the method that best meets your needs and budget. Here are your options:
- Personal Contract Purchase
Buyers may choose a balloon payment for a personal contract purchase to reduce the lease costs at the end of the purchase. Since this is based on market value, the buyer will be responsible for any damage-related costs. Depreciation will also have an impact on the monthly payments.
This finance option is usually offered by van brokers that sell new and used vehicles. It works just like a loan but does not demand the full price all at once. It also comes with several perks like free maintenance and other services.
The contract will include options for whether to return or buy the van in the future. That is why dealers consider adding guaranteed minimum future value to the agreement.
Disadvantages of PCP
- Balloon payments are not that affordable and must be attained to have a chance of owning the van.
- Buyers will be charged in case of wear and tear.
- Exceeding the agreed mileage term requires some fees.
- Hire Purchase
It is reasonable to own a new or used van after paying all installments under this agreement. After the initial deposit, the buyer has to pay the balance in installments. It allows the buyer to use the van until the full purchase price is paid.
Unlike PCP, this van finance has a fixed term of up to five years. Buyers can decide to pay a bigger total toward the end of the term, known as a “kettle installment,” or to at first compensation more than the decent sum to abate regularly scheduled installments. In either scenario, it will be less burdensome to settle monthly payments.
Another difference is there are transfer fees you need to pay for van ownership at the end of the term. You can sell the van as long as it is already paid for, with or without the lender’s approval.
Since credit score matters in a personal loan, HP could be the best recourse if you have a poor credit history. There is no mileage limit as well.
Disadvantages of HP
- Ownership is only transferred after being fully paid.
- No additional services.
- The lender’s permission to sell the van is necessary during the HP term.
- The lender will take the van if you fail to pay.
- Van Leasing
This is a form of van finance with monthly payments plus interest to have the right to use the vehicle. The agreement will last for up to five years, and the longer it is, the less monthly due you will pay.
It may include the cost of damage during the lease period. Taxes and upkeep are two additional costs associated with hiring vans.
After the agreed-upon lease period, you are unable to purchase the van. Van ownership is not covered by this agreement; only rentals are. You will be entitled to use the van for the agreed-upon period with fixed monthly payments.
However, the cost of the vehicle is exclusive of VAT. This saves you money on taxes and depreciation because you do not own the van.
Disadvantages of Van Leasing
- It requires a higher deposit than other options.
- No ownership.
- Taking the van abroad needs the lender’s permission.
Final Thoughts
To summarize, van finance is a great escape from high monthly payments. You can make the payments on a monthly basis, so you won’t have to spend all of your money at once. It is now popular in the UK because of lower interest rates. Lastly, if this is your first time, the plethora of van finance can be quite overwhelming.