Business

What You Never Knew About Van Finance

posted by Chris Valentine

Some of the best kept secrets about van hire purchase are the ones that you’d never be told upfront, and they can have a direct impact on the way that your hiring process goes. Not only are there a few tricks you can use to keep prices lower in certain situations, but there are tactics that companies might use to make you pay more than you need to. If you are a newcomer to the world of vehicle rentals, it helps to know what you are dealing with before you dive into an expensive contract.

Declined Leases

In many cases, if you are declined for a van finance lease, it will sometimes be marked down in your credit file and temporarily impact your credit score. If you keep reapplying with different lenders, these ‘marks’ can become even stronger, so attempting to brute-force an acceptance of your van finance lease is rarely a good idea.

Keep in mind that each lender has different criteria for accepting or declining people who apply. As such, there isn’t a universal ‘pass or fail’ system, and each lender that declined you could have a different reason for doing. This can work in your advantage: by asking why you were declined, you can get an idea of where you went wrong and what needs to be changed.

For example, if you were declined for the same reason by multiple lenders, it is clearly something that you need to counteract. On the other hand, if the grounds were all different, you might be lacking in multiple areas. This can indirectly tell you what is going on and how you can slowly tweak things over time.

Balloon Payments

Balloon is a slang term for a large final payment on a lease or rental, and each company has a different method of calculating balloons. For example, one company might base it on a very complex set of equations and streams of data from auctions, while another may simply use a flat percentage price of the vehicle’s worth.

In many cases, the logic behind a balloon is based on around eighty-five percent of the total auction value, not counting extra payments that come from the vehicle’s mileage. A driver who racks up a higher mileage before the final payment will need to pay more as a result, while somebody with less milage will have their costs reduced. 

Remember that this isn’t the same for every company. Each one may have a different system, and you won’t always be able to tell exactly how they calculate it or what elements matter most. Some companies will make their calculation methods and equations completely clear and transparent, but with others, it will be considered a company secret and rarely shared with customers.

Tax

Due to the way that many companies receive their taxes, a lot of companies want to shed as much as possible in a single financial year. If you run a company that is just starting out or has relatively low profits, low finance leases can be the better option because of this, since it can transfer tax savings forward to the coming year instead of raising your tax expenses for the current year.

You can sometimes look into calculation tools to help you predict how much you would need to pay in each financial year, making it slightly easier to track the money you owe and the amount that you might be able to save with some careful management of your own funds.

Van Options

While companies may not directly advertise it, van hire purchase can often be used on a range of vehicle types. This isn’t just vans of different sizes, but more specific vehicle options, such as refrigerated vans or crew vans. Sometimes, these will be second-hand options, but in other cases, the company may have a spare vehicle that hasn’t ever really been advertised to its customers.

Some of these, especially small buses and tipper vehicles, are ideal for van finance use since they aren’t always needed but can be beneficial in the long run. Hire purchase is also practical for larger businesses, but remember that the price involved can increase dramatically when you look into specialized van types.

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