Yes, used vans are financeable, this can be a cost effective way to acquire a reliable vehicle for your business operations. Used vans are a commonly financed business asset.
At Mill Wood, we only arrange commercial finance – have a look at Lease Loco if you’re looking for personal vehicle finance.
Your eligibility for being approved for used van finance will depend on various factors which we have detailed below:
- The model, age and condition of the van
You may finance a lightly used van in good condition with relative ease. For instance, if the van has 30,000 miles on the clock and is visibly in good mechanical condition, a lender will likely have the appetite to finance this asset. However, if the van you’re looking to finance has been used extensively with 100,000 miles on the clock; and is showing visible signs of wear and tear, it is unlikely that lenders will approve this for finance.
- Your credit history
Lenders look at your credit history in order to understand how you have dealt with debt repayments in the past. If you have a less than favourable credit score, you may find it difficult to finance a used van.
- Your business’ financial position
Lenders will want to see stable business finances and a history demonstrating adequate cash flow to repay the loan.
- Debt-to-income ratio
Lenders will want to see a reasonable balance between your existing business debts and your business income. A high ratio of debt may lead to rejection for used van finance.
- Details of any related businesses
If you run another business, lenders will want to understand this business in detail to ascertain how this business fits into your wider ‘group structure’.
Our lenders consider finance applications through a more commercial lens than high street banks. High street banks focus primarily on your credit history, whereas our lenders look at the above factors which make up your ‘business case’ – the commercial viability of your business and it’s ability to generate cash. This means, even if you have a less than perfect credit history – our lenders may still consider you creditworthy; whereas you’d find more difficulty with high street lenders.
What are the benefits of financing a used van?
Reduced depreciation
New vehicles lose a significant portion of their value within the first year of use. With used vans, the ‘depreciation curve’ is less severe.
Lower repayments
Used vans are generally less expensive than new vans, meaning the initial investment (deposit) is smaller and your monthly repayments will be lower when financing a used van.
Variety of choice
The used van market offers a broad selection of models and vans with specific features. For instance, vans that have been retrofitted with refrigeration storage for businesses that transport food and beverages.
Lower insurance premiums
Used vans usually come with lower insurance premiums due to their reduced value compared to new vans, meaning insurance costs are reduced and your business retains more capital.
What to look out for when financing a used van
Type of finance
Different financial products provide different levels of service – for example if you have an operating lease on your used van, it is the lender’s responsibility to cover any maintenance and servicing costs – as they are the owner of the asset. If you use Hire Purchase finance, maintenance and service costs will be your responsibility.
Aftercare and warranty
It’s a good idea to check the level of aftercare covered by the manufacturer’s warranty. It is crucial you check if and how any potential issues are covered by the manufacturer, and the process involved.
Ownership
The type of finance you use for your used van will have implications on your ownership of the vehicle. If you take the route of an operating lease, you will never own the van – even at the end of the agreement. If you choose to go down the Hire Purchase route, you own the van once the final payment has been made.
Conclusion
Used van finance is a practical way to acquire a commercial van for your business without the need for large upfront investment. Take time to understand the financing options available and the implications of each on your cash flow, ownership, and business goals. If you’re looking for guidance on what’s best for your business, get in touch with Mill Wood.
