Van leasing and van finance
Need a new van for your business but unsure whether to buy or lease? Van finance and leasing are two of the most popular ways UK businesses acquire commercial vehicles without paying upfront.
Both options can help manage cash flow, but they work in different ways. This guide breaks down how van finance and van leasing differ, the pros and cons of each, and how to decide which is right for your business.
Van finance vs van leasing: what’s the difference?
What is van finance?
Van finance usually refers to a hire purchase (HP) or finance lease agreement that lets you spread the cost of a van over a set period. At the end of the term, you either own the van or pay a final balloon payment (depending on the agreement).
With van finance, your business has more control over the vehicle, and you can often customise or sell it after the agreement ends.
What is van leasing?
Van leasing involves renting a van over a fixed term. You return the vehicle at the end of the lease, with no option to buy. It works similarly to personal car leasing, but for business use.
This is often more affordable in the short term and gives businesses access to newer vehicles every few years—without long-term ownership or depreciation concerns.
Key differences between van finance and van leasing
Feature | Van finance | Van leasing |
Ownership | Optional (HP) | No ownership |
Upfront costs | Deposit required | Lower initial cost |
End of term | Keep or sell the van | Return the van |
Mileage restrictions | Typically none | Usually applies |
Maintenance responsibility | You | Often included in lease package |
Best for | Long-term use or ownership | Short-term access to new vans |
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Benefits of van finance
Asset ownership
Option to own the van at the end of the term
No mileage restrictions
Ideal if your usage is high or variable
Customisation allowed
You can brand or modify the van
Potential resale value
Retain or sell the asset later
Fixed repayments
Easier budgeting over time
Benefits of van leasing
Lower monthly payments
Often cheaper than financing
Access to new vans
Upgrade regularly without ownership risks
No depreciation worries
Return the van after the lease ends
Optional maintenance packages
Reduce upkeep costs
Tax advantages
Lease payments may be deductible as a business expense
Estimate your costs today
If you're ready to take your business to the next level, use our business loans calculator to get an idea of what you can afford.
Want to understand the cost of your loan?
Use our business loan calculator below to find out how much you can borrow to take your business to the next level.
Calculations are indicative only and intended as a guide only. The figures calculated are not a statement of the actual repayments that will be charged on any actual loan and do not constitute a loan offer.
Monthly payments
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Total interest
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Length of loan
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Total cost of loan
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Financial product information
Representative example*
• 7.63% APR Representative based on a loan of £50,000 repayable over 24 months.
• Monthly repayment of £2,252.94. The total amount payable is £54,070.56
*Some lenders may apply fees during the application process, please note that these are set and provided by these entities.
Annual Percentage Rates
Rates from 2.75% APR
Repayment period
1 month to 30 years terms
Common use cases
Van finance is ideal for businesses that:
Want to own their vehicles long term
Have high mileage needs
Need specific customisations (e.g., refrigeration, branding)
Plan to keep vehicles for over 3–5 years
Van leasing is best for companies that:
Prefer new vehicles every few years
Want fixed costs and lower upfront payments
Don’t want the hassle of selling vehicles later
Need flexibility or operate under mileage limits
What affects your eligibility?
Lenders or lease providers will look at:
Business trading history (typically 6–12 months minimum)
Company or director credit score
Annual turnover and affordability
Type of van and contract length
Whether the agreement is secured or requires a personal guarantee
Having clear records and forecasts can help secure better rates.
Alternatives to van finance and leasing
Asset finance
Asset finance spreads the cost of multiple vehicles or equipment
Business loan
Business loans use funds to purchase a van outright
Hire purchase
Hire purchase is a popular form of van finance with ownership at the end
Operating lease
Operating lease is like leasing but includes maintenance and return options
Line of credit
Line of credit draws funds as needed to purchase vehicles or equipment
How to apply for van finance or leasing
1. Assess your needs
Decide whether ownership or flexibility is more important
2. Compare options
Use a broker like Funding Options by Tide to find the best deal
3. Choose a contract
Decide on van type, term length, and monthly budget
4. Submit documents
Provide bank statements, ID, and financials
5. Get approved
Many lenders respond in 24–72 hours
Frequently asked questions
Can I get van finance with bad credit?
Yes, some lenders work with businesses that have less-than-perfect credit, though rates may be higher.
Is van leasing tax deductible?
Yes, lease payments may be deductible as an operating expense. Speak to your accountant for personalised advice.
Can I finance a used van?
Yes, many lenders offer van finance for used vehicles from approved dealers.
Can I end a lease early?
Possibly, but early termination fees often apply. Always check the terms before signing.
What happens at the end of the lease?
You return the van to the provider. If there’s damage or mileage overage, charges may apply.
Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.
It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.
Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.
Vivek Seda
Asset Lending & Property Team Lead
Vivek Seda is the Asset Based Lending & Property Team Lead at Funding Options. Vivek has been in the commercial finance industry for over five years, helping SMEs in the UK access over £40m of funding in that time. He also supports the business on working on corporate finance and structured transactions successfully funding Acquisitions and MBOs for businesses.