Back to Home

  1. Home
  2. Van Finance Guides for UK Businesses
  3. Hire Purchase (HP) for Vans: A Complete Guide for Business Buyers

Hire Purchase (HP) for Vans: A Complete Guide for Business Buyers

Hire Purchase remains a simple, transparent, and ownership-focused method of financing commercial vehicles. It’s best suited to businesses that value stability, full control, and long-term return over short-term flexibility.

What is Hire Purchase?

Hire Purchase (HP) is a traditional and widely used method for businesses to finance new or used vans. It's effectively a loan secured against the vehicle, where you spread the cost of ownership over a fixed term, usually between two and five years.

You pay an initial deposit, make monthly payments plus interest, and at the end of the agreement you own the van outright.

Unlike leasing, there are no mileage restrictions, and the van appears as a business asset on your balance sheet from day one.

How Hire Purchase Works

  1. Choose your van - select any new or used van, from compact Renault Kangoo to a large Renault Master.
  2. Pay a deposit - typically 10-20% of the vehicle's value.
  3. Agree a term - usually 24 to 60 months.
  4. Make fixed monthly payments - covering capital and interest.
  5. Ownership transfers after the final payment (and a nominal "option to purchase" fee if applicable).

There's no balloon payment at the end, meaning your business fully owns the asset once the final instalment is made.

Hire Purchase in a sentence:
You're buying your van in instalments. And when you've paid the last one, it's yours.

Key Advantages

✔ You own the van outright
Once all payments are made, the van becomes a business asset you can keep, sell, or trade in.

✔ Predictable budgeting
Fixed monthly payments make cashflow management simple and stable.

✔ No mileage limits or condition charges
You have full control over how you use the vehicle without the constraints of a lease.

✔ Potential tax benefits
As the van is a capital asset, your business can claim capital allowances and offset interest charges against taxable profits. VAT-registered companies can usually reclaim VAT on the purchase price upfront.

✔ Builds long-term equity
The vehicle retains a resale value at the end of the term, giving you a tangible return compared with leasing.

Considerations

⚠️ Larger monthly commitment
Because you're financing full ownership, payments are usually higher than leasing options.

⚠️ Depreciation risk
As the van's owner, your business absorbs the depreciation cost over time.

⚠️ Balance sheet impact
Hire Purchase is classed as a business liability, which may influence future borrowing capacity.

⚠️ Maintenance and warranty
You're responsible for all running costs, maintenance, and repairs outside of the manufacturer warranty.

Who Hire Purchase Suits Best

Hire Purchase suits businesses that:

  • Want to own their vehicles outright

  • Keep vans for longer than three years

  • Have consistent use and mileage levels

  • Want the flexibility to modify or brand their vehicles freely

  • Prefer to manage depreciation themselves rather than pay a leasing premium

This model works particularly well for trades, construction firms, logistics businesses, and delivery companies where vans are used intensively and retained for many years.

Example Scenario

A plumbing business purchases a Renault Trafic for £25,000 + VAT.

  • Deposit: £5,000

  • Term: 48 months

  • Monthly payments: ~£475 + VAT
    At the end of four years, the business owns the van, which still has a resale value of around £7,000. The business can either sell it to release cash or retain it for continued use.