There are a lot of things to think about when taking out van finance, from the van’s capacity to its mileage. But in terms of the loans available, there are just three main types to consider: hire purchase, personal contract purchase, and personal loans. We’ve outlined each of these in more detail below.
Hire Purchase (HP) - With a hire purchase agreement, you generally pay an initial deposit, then monthly instalments towards the cost of the van. You can choose a timescale that suits you, though typically HP arrangements last between 12 and 60 months. Once you make the final payment, you’ll own the van outright.
Personal Contract Purchase (PCP) - If you’re looking for smaller repayments, PCP may be a good option. The main difference between personal contract purchase and HP is that you’re paying towards the depreciation of the van, not its initial value, so if you wish to buy the vehicle at the end of the term, you’d need to make what is known as a balloon payment.
Personal Loan - If you decide to take out a personal loan to purchase a van, this would mean you could buy the vehicle outright, and then simply make regular payments to the lender. Unlike the finance options above, a personal loan is unsecured, which means there is no risk of losing your van should you be unable to keep to the instalments. However this may mean the interest rates are higher, and people with bad credit often find unsecured loans harder to obtain than secured loans.