Van Finance for Self-Employed - Loan & Leasing Guide

If you’re self-employed and working as a sole trader, one of your main concerns will be the options available to you when it comes to van finance deals. 

Self-employed workers make up a large portion of the country’s workforce, so it is important you can gain financial access to a vehicle that will help you do your job properly. In fact, according to the Office for National Statistics, as of March 2022, there were over four million self-employed workers registered in the UK. 

Now that self-employment is more commonplace, finding van finance as a sole trader should not be complicated. To help, we’ve put together a thorough guide on van finance for self-employed individuals. Here we’ve answered many of the key questions relating to self-employed van finance… 

Can you claim van finance as self-employed?

The short answer to this question is yes, if you’re self-employed you can still claim for van finance. As a sole trader, a work vehicle can be vital in the day-to-day running of your business, but of course, it needs to be cost-effective too.

Discover in our dedicated blog if you should buy or lease a van, and find out below what documents you’ll be required to provide when applying for finance. 

What do you need to finance a van?

When applying for van finance, you will be asked to provide some documents to help with the application process. These items may include: 

• Proof of income; you could be asked to provide up to three months of bank statements
• A copy of your latest tax return
• A proof of earnings SA302 form from the HMRC
• Proof of address; you may need to prove you’ve been a UK resident for at least five years
• Employment history evidence; a lender may also require you to provide details of the work you’ve carried out over the past three years 

Can I buy a van as a sole trader? 

As well as the opportunity to lease a van, sole traders can purchase a van outright too. Whilst it’s not the preferred option compared to leasing a vehicle, many sole traders still choose to buy a van for their business. 

When it comes to purchasing a new, nearly new or used van, you’ll want to choose the right model for you and your business. Research is key when it comes to selecting the right van for you as there is a real variety of models available - from panel vans to crew vans, pick-up trucks to minibuses, it’s important you invest in a van to complement your everyday needs. 

Is it hard to get van finance?

You’ll be pleased to hear that the process of applying for van finance as a self employed individual is relatively straightforward and very similar to how you’d apply for a bank loan or credit card.  

Assuming you have a reasonable credit history, when it comes to applying for van finance, the lender will be required to check if you can afford the monthly payments over a set period of time. All being well, your finance application will be signed off and you’re good to go!

However, if you have a poor credit score, you will of course want to understand the options available to you. We’ve explained more about bad credit van finance, below.

Can you get with bad credit van finance?

If you’re self-employed and have a poor or bad credit rating, accessing van finance will prove more difficult, but it is possible to still be approved by a lender. Some lenders specialise in bad credit van finance to help those with poor credit obtain a loan.

Van drivers who may have defaults and CCJs against their name or have previously been bankrupt may still be able to be approved for van finance courtesy of a specialist lender. Of course, you will still be required to prove you can afford to make the monthly payments and will need to provide the necessary documentation to do so. 

Can I finance a car if I'm self-employed?

As a sole trader, it might not be a van you need to support your business, it may be that you wish to access finance for a car instead. If you’re self-employed, applying for car finance is similar to the process of applying for van finance. 

A common misconception is that as a self-employed business owner, you can’t get finance for a car, but that is simply not true. It may be that the size of your business or the type of work undertaken doesn’t require the use of a van, so a car is needed instead. Below we explain how you can get approved for a car loan… 

How do you get approved for a car loan if you are self-employed?

Whilst your income may be considered less predictable as a self-employed individual, there are many lenders that will help. It’s important not to be put off by the potential barriers, but to embrace the lenders who have become savvy in the sector and willingly support you as a sole trader. 

Below we’ve suggested some key tips to help you in your quest for car finance: 

1. Spring clean your finances by settling old loans, paying off any outstanding credit card bills and ensuring you stay out of your overdraft
2. Get up to speed with your current credit score - do you know what it is and can it be improved?
3. Are you linked to someone with a poor or bad credit history? If you share a bank account or mortgage with a partner, you will need to factor in their credit history too as it may affect your finance application
4. Reduce your spending habits before you begin applying for finance

Can you get financing if you are self-employed? 

As we’ve explained above, as a self-employed individual you can absolutely apply for finance when it comes to driving a van, a car or a motorbike for your day-to-day needs. It is worth bearing in mind that there are some parameters when it comes to doing so; if you’re newly self-employed or have just set up your own business, there are some initial restrictions to consider when it comes to applying for car or van finance:

• Your business will need to be officially registered and allocated a company number 
• You will need to be trading for a minimum of two years
• Lenders will require evidence of your net profit and many will expect it to be double the amount of money you are hoping to borrow from them
• You’ll be expected to declare if the van, car or motorbike is to be used for business or personal use (or both)
• Self-employed taxi drivers may find that many lenders won’t finance a car or van required to ferry passengers

Do sole traders pay company van tax?

One of the perks of being self-employed means that you are not required to pay company van tax. As a sole trader, you as an individual are classed as a business, which means you are not viewed as an employee - your van is not a perk, but a necessary requirement for you and the business. 

Is leasing a van tax deductible for sole traders?

If you’re self-employed, you’ll be pleased to hear that leasing a van is absolutely tax deductible. Using your tax return, you can claim both the van leasing payment and fuel usage as expenses against the business. 

VAT-registered businesses will also be entitled to claim back 100% of the VAT assuming that the van is used purely for work purposes. If the van is also used for personal journeys, you can still claim back part of the VAT, up to 50%. 

Van finance for the self-employed at Loads of Vans

Here at Loads of Vans in North Cheam, South London, we supply vans to keep the nation moving. As an established new van and used van centre serving Surrey and South London, we supply high-quality new, nearly new and approved used vans for you and your business. 

If you’re self-employed, it’s vital you choose the right type of van to run a successful company. We have over 400 vans in stock right now at fantastic prices and provide nationwide delivery to all four corners of the UK. Watch our ‘Finance Leasing Explained’ video below and discover the benefits of leasing a van:

The benefits of this type of contract - video

Whether you’re searching for a small van, medium van, large van or pick-up truck, we can help. Van finance leasing is the preferred method of funding for many sole traders and we’ve helped hundreds of self-employed individuals secure the funds they need for their four-wheeled business partner.  

Why not consider an electric van and join over 30% of the UK businesses that have already made the transition to a zero-emission vehicle. We offer some of the best electric vans on the market at very competitive prices.  

Our vans are available from just £99 a month and best of all, we have a huge amount of vans in stock that are available to drive away today - check out our NEW VAN DEALS and bag yourself a bargain! 

Do you think of starting a new business soon? Read our article where we give you the best van business ideas that are easy to start and can give you extra income or our business van finance blog to know all about ways of financing your van. Whether you have good or bad credit and are in need of van finance, get in touch to speak with one of our finance specialists for more information and find out how we can help.