Choose the right finance package for your new van purchase

If you’ve been toying with the idea of buying a new van, there are some pretty compelling reasons for buying sooner rather than later.

Drivers of commercial vans up to 3.5 tonnes can currently benefit from the government’s scrappage scheme which offers £2,000 towards the purchase of a new van when you trade in an old model registered before 28 February 2002. But while this is a pretty good incentive to get behind the wheel of a new vehicle, those looking to cash in need to act fast, as the scheme is due to finish at the end of the month.

Do your research

Even if you don’t manage to beat the end of March deadline, you still need to give careful thought as to how you are going to fund your purchase. If you’re in the fortunate position of having sufficient savings put by, you may be able to buy your new van outright, but if not, you need to take the time to research the different types of finance deals available.

Check out the dealer finance

As a van buyer, it’s certainly worth checking out the deals and discounts being offered by manufacturers, as firms such as Renault often run promotions through dealers, such as 0 per cent finance, or substantial savings on selected models.

Nonetheless, it’s worth bearing in mind that to qualify for an interest-free deal on a new van, you’ll need a good credit record, a hefty deposit, and the ability to make large monthly repayments.

Consider the alternatives

Aside from interest-free deals, there are plenty more dealer finance options:
• Hire Purchase: With hire purchase, you will usually need to put down a small deposit, and then make payments in monthly instalments over a set period of years; after the final payment, you then own the vehicle outright.
• Contract Purchase: With contract purchase, you agree to pay a fixed sum each month for a set time; when the payments end, you must hand back the van – or a lump sum to own the vehicle outright.
• Finance Leasing: Alternatively, with finance leasing the lender retains ownership, and you rent the vehicle on a long-term basis for an agreed period.

Word of warning

While it may be tempting to look no further than the finance options offered by the dealer, you need to proceed carefully to ensure you’re getting a good deal before signing up to forecourt finance. The key is to check the total amount payable, and compare this with a personal loan to see which offers better value.

Look at the top loan deals

Spend some time checking out the best personal loan rates currently available, as rates can vary widely. At present, for a loan of £10,000 over five years, Sainsbury’s Finance has a rate of 7.9 per cent, Tesco Bank has a rate of 8.2 per cent, and Alliance & Leicester has a rate of 8.9 per cent.*

While it’s crucial to shop around, you do need to be wary of making multiple applications, as this could have a negative impact on your credit rating – and could reduce your chance of being accepted.

It’s also worth bearing in mind that lenders are operating “risk-based pricing” which means they are only offering loans to the most creditworthy applicants – and even then, often at a premium. At the same time, while the lender may advertise its “typical” rate, the actual rate you end up paying could be higher than the rate shown.

Try haggling

Finally, don’t be afraid of haggling. You may be surprised at how much further you can reduce the price of the van simply by asking; and even if you can’t get the price down, you may be able to negotiate some free extras.

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