How to get the van finance that’s right for your business
For many business owners and self-employed workers, getting a van is crucial. If you don’t have much money saved up, then you may be limited to older vans and can have a big impact on your cashflow. However, if you want to get a van and pay for it monthly, van finance could be perfect for you! Getting a van on finance allows you to spread the cost of owning a van into affordable monthly payments. Monthly payments are determined by several factors and there are several ways in which you can help to get the best deal possible.
Improve your credit score
Finance lenders will usually check your credit before offering you finance to see what type of borrower you are. If you’ve had problems in the past making payments on time, then you may be less likely to get approved for a van loan. Whilst you can still get a van on finance with bad credit, you can save money by having better credit when applying. If your credit is low, you could consider improving your credit score before you start applying. Having a better credit score usually means you can benefit from low rate finance, better chance of approval, lower monthly repayments and save you money.
Prove your income
Another factor which finance lenders take into account is your affordability. Your affordability is calculated by your monthly income and your outgoings. Your affordability can affect your chances of getting approved and also how much you can borrow for a van. If you’re self-employed or don’t have a regular income, you may be wondering how you can prove your income and affordability. If you get paid cash in hand, it is recommended that you pay your wages into a UK bank account each month. This is the easiest ways to show what you earn. Even if you take the money out the next day, its proof of your income.
Types of van finance
There are a couple of ways in which you can spread the cost of your van finance. One of the most popular types of van finance is Hire Purchase. Hire purchase is when you spread the cost of your chosen vehicle into affordable monthly payments with added interest. Hire Purchase is a type of ‘secured loan’ which means that the van belongs to the lender until the final payment has been made. This does mean that the lender has the right to take the van off you if you fail to meet the repayment deadline.
Put a deposit down
Some finance lenders require you to put down a deposit for van finance. Having a deposit saved up can also reduce your monthly payments as it means you don’t have to borrow as much from the lender. It can increase your chances of getting approved too because it indicates that you are good with your money. Even saving up for a few months before your finance application can help to get you approved and bring your cost down!
Budget for the van you can afford
With van finance, it’s important that you don’t borrow more than you can afford to pay back. Not keeping up with your repayments can mean you can lose the van and also result in serious financial consequences. Your budget for a van will also depend on what you need the van for and how you will use it. You will need to also factor in running costs such as fuel and insurance too. Generally, smaller vans are cheaper to insure and tend to be more economical.