HP Van Finance Explained
Rates from 7.9% APR. Representative APR 19.8%
Representative example – Borrowing £5,500 over 4 years with flat rate of 10.4% and a representative APR of 19.8%, and a deposit of £0, the amount payable would be £162 per month, with a total cost of credit of £2,282 and total amount payable of £7,782. Finance subject to status. 18+ only.
Let’s explain hire purchase:
Hire Purchase is the most common of all van finance loans and allows you to spread the cost of buying your new van.
An ‘HP’ loan is secured against your vehicle, which means you are effectively hiring the van while you pay back the loan. At the end of the period you will have the option to pay the final purchase fee and the van will officially be yours. The option to purchase fee is typically ONLY £10.
The advantage to HP is that you are unlikely to have the mileage restrictions found on options like PCP, meaning you can drive free in the knowledge that no hidden charges will come your way at the end of the term. HP does however typically come with a higher monthly payment so it really is about what works for your budget.
Depending on the lender, a deposit may be required, however some 0% deposit options are available with certain lenders. This would then be followed by a fixed monthly amount for the period of the loan.
Your monthly payment will depend on a few things:
- How much deposit you would like to pay
- The period your agreement runs for
- The interest rate on the loan
- The van you decide on
HP Finance… How does it work?
A Hire Purchase (HP) van finance agreement is a loan covering the cost of your new used vehicle minus the agreed deposit amount.
You as the customer will then repay the loan on a monthly basis at an agreed amount plus the interest applied on your chosen package.
A typical agreement will last between 1 and 5 years, with a ‘Purchase Option’ at the end, allowing you to take full ownership of the vehicle. Option to purchase fee is typically around £10.
Looking to buy you new van on Hire Purchase? We will need to run a credit check but don’t worry, loans are secured every day for people with a less than perfect credit score.
Why use VanFinanced for your HP deal?
VanFinanced was built to help people drive the van they really want. Our mission is to give you the options so that you can make the best decision based on your personal circumstances.
No matter what your credit score looks like, we can help find you the best hire purchase deal. So whether it’s the new family van with the big boot, or a 2 seater sports van for a weekend blast, we are here to help.
Should I go with HP?
It’s important to always read the documentation attached to any loan agreement. HP is a good way to finance your new van if:
- It’s important that you own your new van outright
- You don’t like changing your vans on a regular basis
- You cover a lot of miles per year
Bad Credit? We can help
Poor credit certainly isn’t stopping drivers across the UK so why should it stop you? In fact, HP is one of the best options for people with a poor credit score.
Yes, your monthly payments may be slightly higher, but you will own the van at the end of your payment term. Ensuring you make your payments each month could also help improve your credit score.
Here at VanFinanced, we work with a range of lenders to ensure we can help drivers with a variety of credit histories get into a new used van. And that most definitely includes those with a poor credit score.
Pro’s and Con’s of HP
Most vans in the UK are sold on some form of credit scheme. It helps break down the cost of getting you on the road in the van you really want. HP is a good option, but may not be right for you so we’ve broken down the pro’s and con’s for you below:
Pro’s
- Following the completion of your payment plan, you will own the van
- Typically, there are no mileage limitations
- There is no nasty balloon payment at the end of the term
- You can borrow the money and pay back over 1 to 5 years
Con’s
- Monthly payments are typically higher because there is no balloon payment
The lender may authorise the sale or modification of the vehicle during the term
- All payments must be made before you own the van
- A guaranteed future value is not in place like it can be with PCP
So what about HP vs. Leasing?
It’s a very common question and although we don’t offer leasing, it could still be the right option for you. Before you make a decision, think about a couple of points…
Do you like to own your vans outright?
If this is a major factor in your van buying journey, then HP is a great option. You will own your van at the end of the payment term. If you prefer to change your van more frequently and owning the van is of less importance, then leasing may be a better option.
Leasing may come with restrictions.
If you don’t want to be limited on the miles you drive, then leasing is possibly not the option for you. You may also find tight restrictions on the condition of the van upon its return, with fees potentially being applied.
It may be that neither of these options are right for you, but luckily there is a third option that sits somewhere in the middle. This option is called PCP.
What about a personal loan?
Are you thinking about a personal loan for your next van purchase? There are a couple of points you need to be aware of.
How important is owning the van quickly?
Van ownership is something that applies to both HP and Personal Loan options. The difference being that with a personal loan, you own the van as soon as you pay the seller. You can also sell or modify the van whenever you wish without permission from a third party.
This luxury comes at a cost…
Personal loans can often come with a higher interest rate than other finance options, including HP. This means your monthly payments may be pushed beyond your budget, with the total amount payable potentially being considerably higher.
Frequently Asked Questions
