Van Finance
Tips For Buying Your Van On Finance
Considering a loan to finance a van or other vehicle?
Buying a van can be a significant financial investment and taking out finance is often the most cost-effective way to fund the purchase.
Van finance is widely available and there are many different products with different benefits. Van finance options can take many forms, but usually involves taking out a credit agreement directly with a dealer or van finance broker. Not all of the options will be suitable for you, and it’s best to deal with know your facts to ensure you get the right deal for you.
Know Your Credit Score
Whenever you apply for any kind of loan, the lender will check your credit report to let them know about your history of borrowing money. They basically need to assess how good a risk you are likely to be. Do you have a history of paying your loans in full? Or do you default on a regular basis? The main credit scoring companies are Equifax and Experian, which prepare credit report of individuals and companies.
It’s advisable that you check your credit report every 6 months or so, as there can be errors which affect your ability to get finance. With credit fraud on the rise, it’s also a good way to make sure there are no bogus credit items on your report.
- Check our Credit Rating Guide
Deposits
There are often schemes that offer a vehicle on finance with no deposit. This is usually only for people with good credit, and will increase the monthly payment.
If you’re thinking about taking out van finance, one of the ways to cut the costs of borrowing is to pay a larger deposit. With many vehicle finance options such as Hire Purchase (HP) and Personal Contract Plans (PCP) the bigger the deposit you pay initially, the lower the monthly repayments will be.
If you have poor credit, you are likely to need at least 3 month’s payments as a deposit.
Plan Your Budget
You should think carefully before taking out any new credit agreement to make sure that you can afford the monthly payments. You will need to consider any other loans or credit cards outstanding and make sure your budget covers all of the repayments.
Before you decide what van you would like, sit down and write out a list of your income and costs. This will help you to understand just how much money you can realistically afford to pay for a van loan. You may not be able to afford to borrow enough money to get the perfect van, but it is far more sensible to borrow only what you can afford to pay back.
Consider a used van rather than new, which can be much more cost-effective.
What Loan Term?
A typical loan term (the time you have to pay the loan back) is over 1-5 years, with most being 3-4 years. The more you can afford to pay each month, the less interest you will pay overall … because you’re paying the loan off in a shorter amount of time. If your budget is tight, then a longer term loan could be a more suitable option. The monthly repayments will be lower, which means it will take longer to pay off the loan … but probably easier for you to manage.
It's important to get van finance advice such as VanFinance.com before you buy a van on finance. If you do borrow money against a new van then if you fail to meet the money repayments, your van may also be repossessed, which could be tragic if you need the van to earn your living. You could end up owing money on a van that’s no longer yours and get into debt.
- Check our Credit Rating Guide