People often choose hire purchase because they eventually want to own their van and they think HP is the only way to achieve this. There may be other ways but nothing wrong with Hire Purchase. Fixed costs, no mileage restrictions and it’s yours at the end
Hire Purchase on a van is much the same as HP on anything else, like a television. You divide the amount borrowed by the number of months of the contract, and add a bit for interest. The main difference in HP on a van is that you cannot finance the VAT on a van and therefore you normally have to pay all the VAT as a deposit. If you are not VAT registered then it is a big lump of money to pay out that can’t really be recovered at all until you eventually sell the van. There is an advantage in that there is no VAT on the repayments but this is really just because you have paid all the VAT already.
There are advantages in terms of tax treatment with Hire Purchase with capital allowances. We are not accountants, although the MD used to work for a firm of chartered accountants when he still had hair! Therefore we do not advise on the best tax position for businesses in terms of the type of finance they take. All businesses are different so please talk to your own accountant in order to find the best acquisition method for your vehicle.
