Vehicle and fleet finance for company vans, cars and HGVs

Commercial vehicle finance lets your company spread the cost of vans, HGVs, company cars and other work vehicles over a fixed term, with the vehicle itself as the lender's main security. The agreement is always in your company's or partnership's name, not a director's.

1. Specify the vehicles. Agree the make, model, specification and any conversion work, such as racking, tipper bodies, tail lifts or refrigeration units, with the dealer or body builder.
2. Decide how you want to hold them. Choose whether the company should own the vehicles, rent them for most of their life or rent them for a set mileage and hand them back.
3. Lender assessment. The lender checks your company's accounts, bank statements and credit history, the directors' credit records and, for HGVs, the operator licence. It also forms a view on what the vehicles will be worth over the term.
4. Offer and documents. The lender issues the agreement, which your company signs. Many lenders need confirmation of insurance before delivery.
5. Payment and delivery. The lender pays the dealer, the vehicles are registered and your company takes delivery.
6. Running the agreement. Your company makes the payments. Depending on the product, it also maintains the vehicles or relies on a maintenance package.
7. End of term. Your company owns the vehicles (hire purchase), arranges their sale or continues renting (finance lease), or returns them (contract hire).

Hire purchase suits vehicles your company will keep for a long time, contract hire suits vehicles you replace on a regular cycle, and a finance lease sits between the two. The right choice depends on mileage, how long you keep vehicles and who you want to carry the resale risk.

Hire purchase

Your company pays a deposit and instalments and owns the vehicle at the end. It suits HGVs, trailers and vans that are run for many years or driven hard, where contract hire mileage and condition charges could be costly. A balloon payment can lower monthly costs. Read more about business hire purchase.

Finance lease

Your company rents the vehicle, often with a balloon or residual set at the end. When the lease ends, the vehicle is usually sold, and depending on the agreement your company may receive most of any surplus over the balloon or have to make up a shortfall. It suits companies that want lower rentals but are happy to take the risk on the vehicle's value. See our page on equipment leasing for how leases work more generally.

Contract hire

The lender sets the rental from the vehicle's price, its expected value at the end and the agreed term and annual mileage. The lender carries the resale risk and your company hands the vehicle back. Adding a maintenance package can cover servicing, tyres and repairs in one rental, which makes fleet costs very predictable.

Quick guide

• High or unpredictable mileage, long ownership: hire purchase.
• Predictable mileage, regular replacement, minimal admin: contract hire, possibly with maintenance.
• Lower rentals, willing to take resale risk: finance lease.

The cost is everything your company pays across the agreement, including fees and end-of-term charges, compared with the price of the vehicles. Compare offers on total cost over the period you will use the vehicles, not on monthly payment alone.

• Finance charges or rentals: set by the lender's pricing, the term and your company's profile.
• Deposit or advance rentals: a larger upfront payment reduces the amount financed.
• Balloon or residual: lowers monthly payments but leaves a larger amount at the end.
• Documentation and option-to-purchase fees: common on hire purchase.
• Excess mileage and damage charges: on contract hire, usually a set amount per mile over the limit plus charges for damage beyond fair wear and tear.
• Maintenance package: an added monthly cost on contract hire if chosen.
• Early termination charges: can be significant on contract hire.

Lenders price on the vehicle type and its used market, age, mileage, term, deposit and your company's credit profile. Popular van and car models with strong resale values often attract keener contract hire rentals than specialist vehicles.

Illustrative example only: actual costs depend on the lender and your circumstances.

A building services company buys three vans at £30,000 each plus VAT, a total of £90,000.

• Deposit of 10%: £9,000
• Amount financed: £81,000 over 60 months
• Illustrative finance charges: £16,200
• Total of instalments: £81,000 + £16,200 = £97,200
• Monthly payment for the three vans: £97,200 ÷ 60 = £1,620

The company owns the vans after the final payment and any option-to-purchase fee. You can try other terms and deposits with our asset finance calculator.

Lenders size vehicle finance on the value of the vehicles and whether your company can afford the payments. For a fleet, many lenders also set a total exposure limit for the company across all its agreements.

For larger fleets, lenders usually want filed accounts, recent management accounts and details of existing finance. Hauliers may be asked how vehicles are deployed on contracts and how long those contracts run. The operator licence must also authorise enough vehicles for the fleet you plan to run. For sector-specific points, see our page on logistics and transport finance.

Check the agreement terms and the practical running costs, because both affect what the vehicles really cost your company.

• Mileage allowance: set it realistically on contract hire. Underestimating can be expensive at the end.
• Return standards: understand the fair wear and tear standards the lender will use.
• Early termination: know what it costs to hand back or settle early if contracts are lost.
• Personal guarantees and repossession: directors may be asked to guarantee the agreement, and vehicles can be repossessed if payments are missed.
• Emission zones: check whether vehicles meet the standards for London's ULEZ and Low Emission Zone, Clean Air Zones in some English cities and Low Emission Zones in some Scottish cities. Older vehicles that do not comply may face daily charges or penalties.
• Tax on company cars: cars made available to directors or staff for private use usually create a benefit in kind, and electric cars currently have lower rates. For corporation tax, 15% of lease rentals on cars with CO2 emissions above 50g/km is usually disallowed. Ask your accountant how this applies.

Dedicated vehicle finance is usually the most direct way to fund vehicles because the vehicles secure the borrowing. Alternatives can help in some situations.

• Asset refinance: if your company already owns vehicles outright, it may release cash from them to fund new ones or working capital.
• Unsecured business loans: can fund vehicle costs that lenders will not secure, such as specialist conversions, alongside other spending.
• Paying cash: avoids finance charges but ties up working capital that could be used elsewhere.

Sometimes. Vans and widely used HGVs have a strong resale market, so some lenders consider younger companies or those with past credit issues, but each lender sets its own rules and some will decline.

Expect a larger deposit, a shorter term, an older-vehicle restriction or a director's guarantee in these cases. Contract hire is usually harder to obtain with a weak credit profile because the lender carries more risk. Minimum trading periods vary from a few months to two or three years.

Vehicle finance for limited companies, LLPs and partnerships of four or more partners is generally unregulated. Consumer Credit Act protections generally do not apply, so the agreement itself sets your company's rights.

Read the terms in full, especially those covering mileage, returns, termination and default, and take advice where needed. Welcome Finance is not authorised or regulated by the FCA, and arranges unregulated business finance only, so agreements are always in the company's or partnership's name. Our guide to regulated and unregulated business finance explains more.

We are a commercial finance broker, not a lender. A dedicated relationship manager, a real person available by phone, email and chat, stays with your company from the first enquiry until the lender pays the dealer.

1. Complete our 60-second eligibility check, which does not affect your credit score.
2. Your relationship manager reviews the vehicles, mileage and how long you plan to keep them, and explains which structures fit.
3. We approach suitable lenders on our panel. They run their own credit checks after you decide to apply.
4. We help you compare offers on total cost and end-of-term terms.
5. Once your company signs, the lender pays the dealer and you take delivery.

We charge your company no fee. We are paid a commission by the lender when the finance completes. You can ask how much it is, and it can differ between lenders. See how we are paid.

Can vehicle finance cover conversions and bodywork?

Often, yes, when the conversion is on the dealer's or body builder's invoice. Lenders may limit how much they fund for specialist bodies with little resale value.

Can a director use a company car financed by the company?

Yes, if the agreement allows it, but private use usually creates a benefit in kind tax charge for that director. The agreement must stay in the company's name.

What is a maintenance package on contract hire?

It is an addition to the rental that covers servicing, tyres and many repairs. It makes costs predictable but adds to the monthly payment.

Can trailers be financed separately from tractor units?

Yes. Trailers are often financed on their own agreements, and lenders assess them on their type, age and resale value.

Can electric vans and charging equipment be financed?

Many lenders fund electric vans and cars. Some will also include charging equipment on the agreement, though it is usually assessed separately because it has less resale value.

What if we need to return a contract hire vehicle early?

Most contract hire agreements charge an early termination fee, which can be a large share of the remaining rentals. Check the formula before signing.

Do lenders check drivers or how vehicles are used?

Lenders focus on the company, but they may ask about how vehicles are used, the operator licence for HGVs and the insurance in place.

Can we keep a vehicle at the end of contract hire?

Contract hire does not include an option to buy. Some lenders may offer to extend the rental, but if you expect to keep vehicles long term, hire purchase is usually more suitable.