Van Finance for Removals

Van finance for removals is commercial vehicle funding arranged for removal companies and man and van operators. The vehicles are usually converted rather than bought complete from a manufacturer, so the finance needs a lender who will fund the body and the tail lift alongside the chassis, and most operators are better served putting the agreement through the business than taking it personally.

A removals van earns its living in front of an audience. It sits outside a house on a residential street for most of a working day, in full view of the customer, their neighbours and everyone walking past. It is the largest thing your business owns and the most visible advert it has, which is why the good operators keep theirs clean and properly sign-written.

It is also, usually, a converted vehicle rather than one a manufacturer built complete. That matters when it comes to funding it.

Looking for a different trade? See our van finance by trade guides.

Lutons, tail lifts and box bodies

A Luton is a chassis cab with a box body built onto it by a specialist converter, and a tail lift is a substantial piece of equipment fitted on top of that. Between them they can account for a large share of what you are paying.

The difficulty elsewhere is that plenty of lenders value the chassis cab against a price guide and stop there. The body and the lift do not appear in the guide, so they do not appear in the valuation, which leaves a gap between the invoice and what the lender will advance. The buyer is then asked for a deposit to cover the difference on equipment that is genuinely worth what it costs.

We work with lenders who fund the completed vehicle. There are only so many well known Luton body manufacturers and tail lift makers, so where the conversion has come from a recognised builder through a reputable supplier, we have everything needed to put the valuation case to the lender properly and have the finished vehicle funded at what it is actually worth.

If you are buying a converted vehicle, send us the specification along with the invoice and tell us who built the body and fitted the lift.

Why put the van through the business

This comes up most with man and van operators, and it is worth setting out plainly, because it is the reason to use a commercial lender rather than arranging something personally.

When the vehicle is financed through the business, the business pays for it. The payments come out of business income rather than money you have already drawn and paid tax on. The depreciation on the vehicle can be set against your taxable profits, so the cost of the van reduces your tax bill over the years you own it. And if you are VAT registered, the VAT on the purchase is reclaimable in the normal way.

None of that is available on a personal agreement. The van is simply something you own, paid for out of taxed income, working for a business that gets no benefit from having bought it.

Your accountant is the right person to confirm the detail for your circumstances. What we can do is make sure the agreement is set up as business finance in the first place, so that the option is there.

Sole traders and the £25,000 question

We arrange sole trader finance from £25,000, on unregulated credit agreements, because the lenders we work with offer commercial finance only.

In most trades that threshold rules out a good number of applicants. In removals it rarely bites, because £25,000 does not buy a great deal of Luton. Anything reliable enough to build a business on, with a body and a tail lift in good order, tends to sit above that figure anyway. So the vehicle you actually want is usually the vehicle that qualifies.

Limited companies can borrow from £10,000.

Starting out as a man and van

New businesses are a large part of what we place, and a man and van operation is one of the most common ways into the trade.

New limited companies and businesses under two years old can apply. Without a trading record, lenders lean on the director's personal credit history, and a deposit is usually required. Where you have been working in removals for someone else, or trading as a sole trader before incorporating, bring that history to the conversation. It changes how the application reads.

For more on what lenders look for with newly formed businesses, see our new business van finance page.

The vehicles removal businesses finance

One point worth knowing on the 7.5 tonne. Drivers who passed their car test on or after 1 January 1997 do not automatically hold the C1 entitlement needed to drive it, and have to take an additional test. Drivers who passed before that date usually have C1 already. It does not affect the finance, but it is worth checking before you buy a vehicle nobody in the business can legally drive.

Growing from one van to a fleet

Removal firms tend to grow in steps. One van becomes two when the diary is consistently full, and two becomes three when a second crew is taken on.

We can arrange finance across several vehicles at once where you need them together. Where the growth is expected but not yet timed, we can often put an agreed credit limit in place instead, sometimes £50,000 or £100,000 depending on the business. The funding sits there for the coming months, so when the work justifies another van you can commit to it straight away rather than waiting on a fresh application.

What we can arrange that a dealer cannot

Dealer finance is convenient and sometimes the rate is genuinely competitive. What it rarely includes is any of the following.

Funding for the completed converted vehicle

A dealer's finance desk generally works to the guide price of the base vehicle. We work with lenders who fund the body and the tail lift as well, so the finished vehicle is financed at what it is genuinely worth.

VAT deferral

On qualifying agreements the lender pays the supplier the full price including the VAT, then collects the VAT element from your business as a single payment after an agreed period, usually around three months. That gives you time to reclaim it from HMRC first, and there is no charge for the facility.

Little or no deposit

Dealers commonly ask for 10 to 20 per cent down. For a VAT-registered limited company with a reasonable credit profile buying at a sensible price, no deposit at all is a normal outcome with us.

A credit facility for the next van

A dealer can sell you finance on the vehicle in front of you. They cannot agree a limit now for the van you will need when the diary fills up.

Specialist business finance advice

A dealer's finance desk sells a finance product. It is not their job to look at whether the agreement is structured to give your business the benefit, and generally they do not. We will.

Van finance with a difficult credit history

A poor credit history does not prevent a removals business from financing a vehicle. We work with specialist lenders who assess the whole picture rather than an automated score, and strong recent trading often counts for more than something that happened three years ago.

A deposit and a well chosen vehicle both widen the options. See our bad credit van finance page for more detail.

Who can apply

Limited companies can borrow from £10,000. Sole traders from £25,000, on unregulated credit agreements.

Established removal firms, newly formed companies and man and van operators starting out are all welcome to apply. If you are not sure whether your situation works, the quickest thing to do is ask.