For many UK businesses, vehicles play a vital role in day-to-day operations. From vans and lorries to cars and specialist equipment, having reliable transport can be essential for delivering services, moving goods, or managing field operations. But buying vehicles outright can strain working capital.
This blog explores everything you need to know about commercial vehicle finance and alternative finance options, so you can make a smart, informed decision that supports your business growth and cash flow.
What Are Business Vehicle Loans?
Understanding the Basics
A business vehicle loan is a type of finance used to fund the purchase or use of a vehicle for commercial purposes. Unlike personal vehicle finance, these are tailored for businesses and often come with different criteria and more flexible terms.
Common use cases include:
-
Specialist commercial vehicles (e.g. refrigerated trucks, recovery vehicles)
Why Consider Finance for Business Vehicles?
Benefits of Using Finance Instead of Buying Outright
Using finance to fund your business vehicles can offer several operational and financial benefits:
-
Preserve working capital: Avoid large upfront costs
-
Access better vehicles: Afford newer or specialist models
-
Predictable budgeting: Fixed monthly payments
-
Flexible options: Choose the right plan for your business cycle
Business Vehicle Finance Options Explained
Explore the Different Business Vehicle Funding Solutions Available
Hire Purchase (HP)
Own your vehicle outright with a simple, structured repayment plan
Hire Purchase is a popular option for businesses that want to eventually own their vehicle. After paying a deposit, you'll make fixed monthly payments over an agreed term. Once the final payment is made, the vehicle is yours.
Ideal for: Businesses looking for long-term use of a specific vehicle type, including vans, plant machinery or fleet cars.
Key benefits of Hire Purchase:
-
Build ownership equity with every payment
-
Fixed interest and predictable monthly costs
-
Potential to claim capital allowances
Things to consider:
-
Initial deposit typically required
-
You carry depreciation risk from day one
Finance Lease
A flexible solution that gives you full use of the vehicle without tying up capital
With a finance lease, you rent the vehicle for most of its working life. At the end of the lease term, you can either extend the lease or sell the vehicle and keep most of the sale proceeds.
Ideal for: Businesses needing flexibility or wanting to avoid ownership liabilities—such as logistics firms or growing trades.
Key benefits of Finance Leases:
-
Lower upfront costs compared to HP
-
VAT may be reclaimable on rentals
-
Flexibility at the end of the term
Things to consider:
-
You don’t own the vehicle
-
Responsible for maintenance and resale risks
Business Loan
Finance a vehicle on your own terms, using a general-purpose loan
This is a versatile option for businesses that want full ownership from the outset. You can use the business loan funds to purchase any type of vehicle, from a single van to a fleet of commercial cars.
Ideal for: Businesses with strong cash flow and a clear repayment plan, or where vehicles are just one part of a larger investment.
Key benefits of Business Loans for Vehicle Purchase:
-
Immediate ownership
-
Full control over your purchase and usage
-
Can be used for multiple vehicles or asset types
Things to consider:
-
Higher interest rates if unsecured
-
Uses up borrowing capacity for other needs
Asset Refinance
Unlock working capital by leveraging vehicles you already own
If your business has valuable vehicles on the books, you can use them as security to release cash back into the business. This is known as asset refinance.
Ideal for: Businesses needing to improve liquidity or reinvest in upgrades without taking out new loans.
Key benefits:
-
Unlock value tied up in owned vehicles
-
Keep using the vehicle while raising funds
Things to consider:
-
Vehicle must retain enough value
-
Adds to your company’s liabilities
Comparison Table: Choosing the Right Option
At-a-Glance View of the Pros and Cons
Finance Option | Ownership | Upfront Cost | Monthly Cost | Flexibility | Best For |
---|---|---|---|---|---|
Hire Purchase | Yes | Medium | Fixed | Moderate | Long-term ownership |
Finance Lease | No | Low | Fixed | High | Flexible usage |
Business Loan | Yes | High | Fixed | High | Immediate ownership |
Asset Refinance | No | N/A | Variable | High | Releasing cash from assets |
What to Consider Before Choosing
Questions to Guide Your Decision
When deciding which finance solution is right for your business, ask yourself:
-
Do we want to own the vehicle?
-
Is preserving cash flow a priority?
-
How long will we need the vehicle?
-
Do we already own valuable assets that could be refinanced?
- Do I need help sourcing the vehicle? We have a specialist supplier, who can source the perfect vehicle for your business.
How Millbrook Business Finance Can Help
Tailored Support From a Business Finance Specialist
At Millbrook Business Finance, we work closely with UK business owners to find the right funding solution for their commercial vehicles. Whether you're expanding your fleet or upgrading existing vehicles, we offer:
-
Access to 100+ business lenders
-
A choice of finance structures tailored to your needs
-
Expert support from business finance specialists
-
Quick decisions and flexible terms
-
A simple, transparent process
If you require further information or assistance in selecting the best funding option for your business, feel free to reach out to our team at Millbrook Business Finance. We're here to support your journey toward purchasing your next commercial vehicle. Check out our Complete Guide to Business Finance for further information.
Interested to see how much you could borrow? Check your eligibility now to understand your borrowing power.