Business vehicle finance

Last updated on 10 August 2023

Are you thinking of buying a vehicle for your business? Purchasing a vehicle can be an exciting and beneficial way to help drive business success – but it doesn’t come without its own set of challenges. So how does business vehicle finance work?

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Finding the right model and make, understanding the different financing options, budgeting correctly and staying on top of maintenance are all part and parcel of owning a car or van that’s used in a working capacity.

In this guide, we’re here to explain what UK businesses need to know about purchasing their next company vehicle – from setting up finance arrangements to taking care of ongoing expenses.

Video: Business loans and finance explained

Best business car and van finance providers UK

Vehicle finance lenderMinimum financeMaximum financeFinance terms

Bluestar Leasing

£1,000N/AUp to 7 years

Cambridge & Counties Bank

£5,000N/A1 year – 6 years

ClearFunder

£5,000£500,0003 months – 18 months

Close Motor Finance

£5,000N/A1 year – 6 years

Funding Circle

£10,000£250,0006 months – 5 years

Funding Xchange

£5,000£250,0001 year – 5 years

Iwoca

£50,001£250,0003 years

Lombard Business Finance

£5,000£250,00012 months – 84 months

Love Finance

£5,000£500,00018 months – 5 years

Nationwide Finance

£8,000£500,0001 year – 5 years

Santander Finance

£5,000N/A1 year – 6 years

Swoop

£5,000£2,000,0001 month – 7 years

Tide

£500£5,000,0001 month – 6 years
Best business car and van finance providers compared

What is business vehicle finance?

Business vehicle finance is a form of loan or financing arrangement used to purchase vehicles for business purposes. It can be used to acquire cars, vans, fleet vehicles, and other types of commercial transport. This type of finance allows businesses to spread the cost of large purchases over a period of time instead of paying for them in one go.

What types of vehicle can you purchase using business vehicle finance?

Business vehicle finance can be used to purchase a variety of commercial vehicles, from light vans and cars to larger trucks. Depending on the type of business you run and the purpose of the vehicles you need, there are different types of business vehicles available. These include:

Explore business banking

Wallester Business
✓ Virtual & Physical Cards
✓ No Setup Fees
✓ No Monthly Fees
Pricing Trial period Contact

Revolut Business
✓ Business Current Account
✓ Award-Winning Mobile App
✓ Quick & Easy Application Process
Pricing Trial period Contact

Tide Business Bank Accounts
✓ Free, Plus, or Pro Account
✓ iOS & Android Mobile App
✓ Upload & Auto-Match Receipts
Pricing Trial period Contact

Card One Money
✓ No Credit Checks
✓ Simple Fees
✓ Up to 3.5% Cashback
Pricing Trial period Contact

ANNA Money
✓ Apply in 10 minutes
✓ Bookkeeping & Payroll Tools
✓ User-Friendly Mobile App
Pricing Trial period Contact

Co-Op Business Banking
✓ Business Current Account
✓ Online, App & High Street Banking
✓ Quick & Easy Application Process
Pricing Trial period Contact

HSBC Business Banking
✓ Business Current Account
✓ In-Branch, Online & App Banking
✓ FSCS Protected
Pricing Trial period Contact

Metro Business Banking
✓ Business Current Account
✓ High Street Presence
✓ FSCS Protected
Pricing Trial period Contact

Mettle Business Banking
✓ Business Bank Account
✓ Online & App
✓ Quick & Easy Application Process
Pricing Trial period Contact

Monzo Business Banking
✓ Business Current Account
✓ Dedicated mobile app experience
✓ FSCS Protected
Pricing Trial period Contact

Virgin Money
✓ Business M Account
✓ In-Store, Online & App Banking
✓ Insights & Forecasting Platform
Pricing Trial period Contact

Vans

From small panel vans to large cargo vans, these vehicles are perfect for businesses that require transporting goods, materials or equipment.

Pickup trucks

These vehicles offer a combination of carrying capacity off-road performance. They ideal for tradespeople, such as plumbers or landscapers who need to take large amounts of tools with them to a job site.

Cars

Small cars are great for business owners who travel on a regular basis and require a vehicle with good fuel economy.

4x4s

These vehicles provide immense off-road capabilities, making them perfect for businesses that need to traverse muddy or uneven terrain.

Tractors

These powerful machines are perfect for businesses that need to tow heavy loads or move large amounts of materials.

What types of business vehicle finance are available in the UK?

The UK has a variety of business vehicle finance options available. These include:

Hire Purchase (HP)

This is the most common type of business vehicle financing used in the UK. It allows businesses to pay for their vehicles over a period of time, usually between two and five years. At the end of this period, businesses have the option to purchase the vehicle outright or enter into a new finance agreement.

Lease purchase (LP)

This type of business vehicle financing is similar to HP but usually allows for lower monthly payments. At the end of the term, businesses can choose to return their vehicles or continue paying until they own it outright.

Contract hire

This option allows businesses to pay a fixed monthly fee for the use of the vehicle. At the end of the term, they can choose to return it and lease another vehicle, or extend their contract.

Refinancing

This type of business vehicle finance is available for companies that already own vehicles but need to lower their monthly payments. It allows them to refinance the vehicle and pay off the remaining balance over a period of time.

No matter what type of business you run, there is likely to be a business vehicle finance option that suits your needs. Understanding the different options available will help you make an informed decision when it comes to purchasing.

How much does business vehicle finance cost?

The cost of business vehicle finance depends on a variety of factors, such as the type of finance option chosen, the age and condition of the vehicle, and the length of repayment terms. However, it is important to remember that this cost does not just include monthly payments; it also includes any fees or interest associated with the loan. To get an accurate estimate of how much your finance will cost, you should speak to a specialist lender. They will be able to provide you with a tailored quote based on your individual circumstances.

How to get the best business vehicle finance

How to get car finance for a business

  1. Research your options

    Before you start looking for business vehicle finance, it is important to research the different types of finance available and understand which one best suits your needs. You should also compare rates from different lenders, so that you can be sure you are getting the best deal.

  2. Speak to a specialist lender

    Once you have decided on the type of finance that is right for your business, it is time to speak with a specialist lender. They will be able to provide you with tailored advice and quotes based on your individual circumstances.

  3. Compare lenders

    It is important to compare different lenders before making a final decision. This can help you ensure you are getting the best deal for your business vehicle finance needs.

  4. Read the terms and conditions

    Before signing any loan agreement, make sure to read through all of the terms and conditions carefully. This will help you understand exactly what you are getting into and avoid any unpleasant surprises in the future.

  5. Repayment options

    Discuss the repayment options available with your lender, as well as any early repayment fees. This will help you plan your budget and ensure that you can make the repayments on time.

FAQ

Can I use business vehicle finance to purchase a second-hand vehicle?

Yes, you can use business vehicle finance to purchase both new and second-hand vehicles. However, the loan terms may vary depending on the age or condition of the vehicle.

What documents do I need to apply for business vehicle finance?

Most lenders will require proof of income, such as bank statements or pay slips. They may also ask for evidence of any existing debts or liabilities you have.

Are there any restrictions on the type of vehicle I can purchase with business vehicle finance?

Some lenders only offer finance for certain types of vehicles, such as cars or vans. It is important to check with your lender before applying for finance to make sure they will accept the vehicle you are interested in purchasing.

Is business vehicle finance available for sole traders?

Yes, many lenders offer business vehicle finance to sole traders. However, it is important to note that the terms of these loans may differ from those offered to larger businesses.

Is there a minimum amount I need to borrow in order to qualify for business vehicle finance?

Most lenders will require you to borrow at least £1,000 in order to qualify for business vehicle finance. However, some lenders may have lower requirements. It is best to check with your lender before applying.

What happens if I miss a payment?

Missing payments could have serious consequences, including incurring additional fees and higher interest rates. If you think you will struggle to make repayments, it is important to contact your lender as soon as possible to discuss your options.

Is business vehicle finance a good option for my company?

Business vehicle finance can be a great option for companies looking to purchase vehicles. It allows businesses to spread the cost of their purchase over time, which can make it easier to budget and manage cashflow. However, as with any financial decision, it is important to ensure you understand all the costs and terms of the loan before you commit.

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Reviewed by , Managing Director

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