Guide to Securing Financing for A Van with Zero Deposit

Vans are a valuable asset in many businesses. They allow for easy transportation of workmen and equipment from one job site to another. From sole traders to corporations, you will find vans very much in use in the facilitation of work. 

However, it can also be a costly investment. Especially for smaller businesses. And in trying times like the pandemic, many businesses may be facing a cash crunch that makes it even harder to come up with the necessary money to buy one. 

Whether you are just starting out in business or urgently need to make a replacement or addition to your fleet, there is a way to realise this need even when cash flow is tight. Zero deposit van finance allows those unable to raise sufficient funds for a vehicle deposit access financing that will bridge the gap.

This type of financing allows the borrower to acquire the new or used van they qualify for, with a minimal out-of-pocket expense. Most conventional asset financing requires the borrower to raise a certain percentage of the value of the asset as a deposit, while the lender funds the balance. Where raising the deposit is a challenge, zero deposit van finance is an ideal solution. 

It is however an arrangement that comes with some strings attached, including demonstrating the ability to pay what is typically larger monthly instalments and having a good credit score. There are good reasons why these terms should be met, but let us first look at what this financing means. 

What Is Zero Deposit Van Finance?

As said, normal asset financing, be it for a vehicle, machinery, or property typically requires the borrower to raise a part of the value of the asset as a deposit. This makes up their contribution towards the purchase while the lender covers the balance. The balance is then repaid to the lender in instalments for a predetermined period. The larger the amount that is financed, the more interest and larger the instalments that have to be paid. 

With zero deposit van finance, due to the lender financing the whole value of the van value, there is also larger instalments and interest amount to be repaid to the lender. It is a helpful arrangement to businesses that can afford these instalments as the financing allows them to quickly gain access to the vehicle they need to get it working. With a vehicle added to their enterprise, businesses can carry out their work more efficiently and take on a larger workload. This will likely translate into more revenue and growth for the business which should adequately cover the cost of financing. 

Benefits of Zero Deposit Van Finance

Reduced disruption to operations: This kind of financing is streamlined when taken through a qualified lender. The decision process is quick, allowing for borrowers to learn their fate not long after submitting their application and any other required documentation. Once you sign off, you should be able to take possession of the van quickly and get back to work. This can mean just a few days of disruption to your operations, which should not seriously affect your bottom line. 

Build trust with clients: Being able to quickly resume work or add to your workload means your clients will also face minimal disruption. You can complete their jobs more efficiently, helping to boost the level of trust they will have in your business and encourage them to provide referrals. 

Ability to redirect investment where needed: Sometimes it is not that you do not have enough money for a deposit, but that there are other priorities to consider. It could be staff salaries, rent, a need to purchase other equipment, and so on. Finding alternative financing for the van you need means you can redirect the limited funds you have to other areas of the business without feeling strained. 

Types of Zero Deposit Van Finance

  • Personal Contract Purchase (PCP)

This is a more affordable form of financing as the amount to be repaid is pegged on the value of the van that is expected to be lost during the duration of the contract. This means lower monthly instalments. At the end of the contract, you have the option to return the van to the financier without further obligation or buy it with an optional final payment. 

This kind of financing does come with conditions including a limit on mileage and the van being in good working condition by the end of the contract. Also, if the value of the van at the end of the contract is higher than the optional final payment, you may be able to put use the difference in value, or equity, as a deposit toward the purchase of another vehicle. 

  • Hire Purchase

This alternative to PCP ensures that full ownership of the van transfers to the borrower at the end of the contract. This however tends to come with larger monthly instalments and consequently interest charges. 

How It Works

The process typically requires identifying the vehicle and paying a small reservation fee. Whether the seller is the manufacturer or the previous owner, this will let them know you are seriously interested and that they should reserve the vehicle as you make arrangements for financing. 

You then need to approach a financier for this facility. You can likely find such financing online, or through the car manufacturer or broker. You need to fill out an application to be evaluated. They may need information about your income and allow for your credit score to be pulled. The better a credit score you have, the better rates you will secure for your financing. 

Once your application is approved and you sign off, you can arrange for when to take delivery or collection of the van. Repayment of the agreed-upon instalments normally starts about a month from when you sign for the financing or take delivery of the van. 

This financing is accessible whether you want to buy a new or used van. Most lenders will however only consider PCP contracts for newer vehicles less than 6 years old.