What to Expect Buying a Used Van On Finance

Many businesses benefit greatly from being able to have a van at their disposal. However, it can feel like an insurmountable investment when you lack the finances to pay for it out of pocket. Thankfully, today business owners have several options when it comes to financing that allows them to access the van they need without having to make full payment. They can actually pay for their vehicle of choice in low instalments while getting to enjoy its use.

While this can also be done when buying a new vehicle, many business owners have realised how much better of a deal they can get by buying a used van on finance. These advantages include:

  • Easier affordability
  • Wide variety of vehicles to choose from
  • Lower taxation and registration fees
  • Lower insurance costs
  • Cheaper repairs and more easily available parts

When making this purchase, here is what you need to know to make the best-informed choice of vehicle and financing.

1.    Key Documentation

The most important vehicle documentation is the logbook or V5C registration certificate. This is what will grant you ownership and provide valuable details about the vehicle. Confirm the logbook against DVLA records. It is also important to ensure you get a valid MOT test document that confirms the vehicle is safe to use on the road.

2.    Financing Options

There are several ways you can opt to finance the purchase of a van if making a full cash payment is not possible. Hire purchase is a popular option that allows you to pay an initial deposit and pay off the balance of the amount in monthly instalments that include an interest charge. Once payment is complete, ownership of the van is transferred to the buyer.

Personal contract purchase is another similar financing option that also involves paying a deposit and monthly instalments. The instalments are however typically smaller with the option to make a large final payment at the end. In many cases, it may be possible to trade in the van for another vehicle if the mileage is within a pre-determined limit set at the beginning of the financing arrangement and there is no significant damage.

Lease purchases are another financing option whereby the van is paid for in monthly instalments that cover the cost of depreciation and some interest on the amount borrowed. At the end of the lease period, you may opt to buy the vehicle or use the paid-in equity as a deposit towards another vehicle. Lease purchase options are popular for allowing for low monthly payments and allowing buyers to afford more expensive vehicles.

You may also opt to pay for your van using an unsecured loan or even a credit card. Unsecured forms of lending however attract higher interest charges. Secured options like hire purchase offer lower interest on monthly instalments.

3.    Inspection and Test Drive

Make a thorough inspection of the van you want to buy in the daylight. This will allow you to spot physical damage more easily. Use a comprehensive inspection checklist to ensure you cover all the bases and compare this against the car’s service history. Also, take the van out on a test drive. This is another check as to its function and reliability. Be sure to drive it over different kinds of roads to get a good feel for how well it is working.

Conducting a car history check can also help in verifying the details obtained from the dealer including MOT checks, mileage, outstanding debts against the vehicle, history of accidents and write-offs. You can do this on your own through the DVLA and other government sites, or pay a small fee for a private history check through other online service providers.

4.    Van Tax

The taxes you pay on your van will largely depend on what kind of financing you opt for. If you buy your van in cash outrightly, you can apply this purchase price to your income tax bill. If the vehicle is VAT qualifying and you are VAT registered, you may be able to reclaim the VAT on the purchase price if it was included. You can also reclaim VAT on monthly payments made if making lease purchase payments.

Purchase of a van can also often qualify for an annual investment allowance (AIA) which can be put towards lowering a business’s tax bill. Note that this can apply whether or not you are VAT registered. Do check with an accountant to learn what tax benefit you may qualify for that would reduce your tax bill.

5.    Possible Scams

Buying a used van can sometimes come with unique risks you would not encounter if buying a brand new vehicle. It is therefore important to work with a reputable trader. Choose one that has a good reputation, is affiliated with a sound trade association and carries out vehicle inspections via an independent motoring organisation. Some of the common scams to be on the lookout for include:

  • Clocking – this involves tampering with a car’s mileage to reduce the odometer reading and give the vehicle an inflated value.
  • Cloning – this involves changing a vehicles number plates to cover up the fact that it may have been stolen or has racked up traffic offences under its previous owner.