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Van Business Contract Purchase

We recognise that many of our customers see their van as their biggest asset after their client base, so ownership can be really important. Contract Purchase is a great product and can be the best way to achieve this without spending your hard earned cash.

Contract Purchase is an agreement to purchase a vehicle via a series of monthly instalments. Ownership passes to you at the end of the contract following a final payment.

A Guaranteed Residual Value (GRV), which enables lower monthly payments, is set by the finance company at the start of the contract, which gives you three options by the end:

  • Hand the vehicle back to the leasing company (subject to mileage and condition).
  • Keep the vehicle by paying the optional final payment and take ownership.
  • Refinance the final payment amount if applicable (subject to credit and funders discretion). At the end of these payments, you own the vehicle.

Structurally similar to Contract Hire, Contract Purchase enables you to make fixed monthly payments. However, with Contract Purchase you have the option of retaining the vehicle at the end of the contract.


  • Fixed monthly payments
  • Choice of contract period from 24 to 60 months
  • Purchase cost may be Corporation Tax deductible through Capital Allowances
  • Interest elements of monthly payments may be Corporation Tax deductible
  • Can benefit from higher residual values
  • The option to retain the vehicle at the end of the contract without any depreciation risks
  • Road Fund Licence is provided for the full term of the contract
  • The convenience of a full maintenance service, at a fixed monthly cost, is optional


  • Outstanding instalments appear as a liability on balance sheet
  • Vehicle appears on balance sheet
  • Not VAT-efficient


This would suit customers who:

Want a more expensive vehicle than their budget would normally allow i.e. A new vehicle instead of a used one.

Want ownership of the vehicle at the end of the contract.

Want multiple options at the end of the contract.

Want fixed cost, stress free motoring.

Can pay all of the VAT in relation to the vehicle up front.

Van Contract Purchase FAQs

Please just click on a question to reveal the answer.

Contract Purchase

Why would I buy a van using Contract Purchase rather than Contract Hire or Finance Lease?

Contract purchase has many benefits but, most importantly, from 1 January 2013 the AIA (Annual Investment Allowance) increased from £25k to £250k. This now enables most businesses, including sole traders, partnerships and limited companies, to offset up to £250k of capital expenditure against tax. This, in simple terms, means that a business with profits before tax of up to £250k could reduce its income/corporation tax bill to zero by purchasing new equipment to the same value... and that includes the cost of a new van!

Listed below are some of the other benefits you receive with van Contract Purchase:

  • Ownership at the end of the contract.
  • Optional Final Payment (thereby reducing monthly payments).
  • Payments are not subject to VAT.
  • The Capital cost of the van can be written-down utilising the standard writing-down allowances, if not using the Annual Investment Allowance (AIA).
  • Low initial deposit.
  • Fixed monthly payments.
  • Interest reclaimable against Tax.
What are the advantages of Contract Purchase?

The benefit of a Contract Purchase is that a customer could enjoy the payment of a lease (i.e. with advance and Optional Final Payments) while still having ownership (title) of the vehicle at the end of the agreement. As this type of agreement is a purchase plan, the payments do not attract VAT.

How do the costs compare with Contract Purchase to actually buying a van outright?

Our huge buying power in the commercial vehicle market allows us to obtain the best discounts available. As a customer taking a vehicle from us on lease, you will benefit from the full dealer discount, along with a large fleet discount that we negotiate direct from the manufacturer. Your monthly payments will be significantly more competitive than purchasing outright, where you will more than likely receive the dealer discount alone.

With Contract Purchasing when will I have the option to keep my van?

At the end of your agreement, once you have made the final monthly instalment (or Optional Final Payment) you can take full ownership of the vehicle. Your full options at the end of your contract are:

  • Pay your Optional Final Payment and keep your vehicle.
  • Part-exchange your vehicle and use any remaining equity towards the deposit on your new vehicle.
  • Re-finance your final payment through an alternative Funder (finance company).
Do I have to be VAT registered to Contract Purchase a van?

No, you don't have to be VAT registered but on all purchase agreements, the finance company will ask for the full VAT payment upfront as deposit. If you are not comfortable with this size of deposit then a Finance Lease might be a more suitable option.

Can I claim the VAT back on a van through Contract Purchasing?

Yes, if you are VAT registered you are able to reclaim up to 100% of the VAT back in the first quarter. Therefore, if you have put this down as a deposit, you will be able to claim it back pretty much straight away.

Are there any mileage limits with a Contract Purchase agreement?

There are no mileage restrictions on a Contract Purchase agreement, although you must always be careful if you are doing high mileage, that you check your Optional Final Payment is realistic to what your vehicle might be worth. For instance, you would not want to be left with an Optional Final Payment based on 10k miles per annum if you were actually doing 50k per annum because you might be left in a negative equity situation, whereby your vehicle is worth less than you own on the finance when you come to change the vehicle.

Do the CO2 emissions on my van effect my Contract Purchase terms?

No, because the vehicle is classed as a commercial vehicle, it falls into this classification for both road tax and company/personal tax.

Can I change my van mileage during the Contract Purchase period?

There are no mileage restrictions on Contract Purchase, so there would be no need to change this. However, always make sure your Optional Final Payment is realistic, based on the annual mileage you will be doing.

Can I extend the van Contract Purchase agreement?

There is not an option to extend (re-finance) your agreement when it finishes. However, because this is a purchase scheme, the finance company you are funding your vehicle through would always be happy to look at arranging a new finance agreement for you where perhaps you Hire Purchase the remaining balance of your agreement.

What age to I need to be to take out a Contract Purchase agreement on a new van?

You are required to be a minimum of 18 years old, and the finance company would also need to see a copy of your driving licence and some form of utility bill at your current home address.

What deposit do I need to put down to secure the van?

On all purchase agreements, the finance company will require the VAT on the purchase price of the van as a minimum deposit (also mentioned in Question 4). No finance company will ever fund the VAT element of a vehicle on a purchase agreement and, in some cases they might ask for a small deposit (10%) in addition to the VAT. Please keep in mind though, that if you are VAT registered you will be able to claim up to 100% of the VAT deposit back at the end of your next quarter.


Do I have to have a credit check if I Contract Purchase a van?

Yes, we will require some basic financial information from you to proceed through a credit check.

Does approval take a long time?

We use a variety of Funders but, in general, we should have a credit decision for you within 24hrs. Sometimes the finance companies can request further information (such as company management accounts) which may delay the credit decision but, on the other hand, we can sometimes have a credit decision back within an hour.

If I am turned down will this reflect on future credit ratings?

Whenever you run a credit check, it will always leave a small footprint on your credit profile; however, this shouldn't have a detrimental effect on any future applications. Your credit profile will only be affected if your proposal is sent round repeatedly to various finance companies, which could result in a large number of applications appearing on your file.

My credit rating is poor, what are the options available to me?

We have a large number of finance companies and they all have different credit underwriting criteria. What one company might see as bad history, another might find acceptable, and in some cases, might request more information to support your application (such as last 3mths bank statements etc). In all cases, we will always do everything in our power to secure you credit on a vehicle.

Are their particular finance companies that deal solely with bad credit ratings?

Not really, as mentioned before some finance companies will have slightly more relaxed views on credit scores than others will, although we currently don't have one particular company that we work with that purely looks at sub-prime applications.

What specifically is required to set up a Contract Purchase agreement?

It's very simple; we start by taking the information below, which allows us to process your application:

  • Full name as it appears on your driving licence.
  • Company name (if any) or company registration number (if a limited company).
  • Directors details.
  • Bank sort code and account number.
  • Number of years trading.


Do I own the van on Contract Purchase?

When you fund a vehicle through Contract Purchase you own the van at the end of the contract and, in most cases, during the agreement the vehicle will be registered in your name, c/o the relevant finance company, who is funding the vehicle.

Keep in mind that with all finance agreements the finance company actually legally owns your vehicle until such time that you have paid off the finance and they no longer have an interest in your vehicle.

When you buy a commercial vehicle using Contract Purchase, it is classed as an asset to your business and is shown on your balance sheet.

What will happen to the van at the end of the Contract Purchase?

Once you have made your Optional Final Payment to the finance company, it is then up to you what you do next, you could either keep running the vehicle or part-exchange it for a new one. We will be in contact with you throughout your agreement and at the end of your contract, one of our trained advisors will call you to run you through your full options available.

Will I be responsible for parking tickets and speeding fines etc?

Yes, because the vehicle is owned and registered in your name, then all parking and vehicle related fines would be your full responsibility.

Who pays for new tyres, MOT and servicing?

You have the option of including a full maintenance service with your Contract Purchase agreement at a fixed monthly cost. Additionally, all new vehicles now come with a minimum of 3 years manufacturers' warranty, so this should cover you for any major mechanical fault that might occur.

What happens if the van is in an accident during the Contract Purchase period?

Your first port of call should be your insurance company, to notify them of the accident. Unless the vehicle is a write-off then there is no need to notify the finance company.

What happens if dents and scratches appear on the vehicle when I return it?

Your vehicle is not returned at the end of a Contract Purchase, so any damage will only devalue the vehicle when you come to sell or part-exchange it.

Can the van be customised, ie, with tinted windows, or lower it?

Yes, you own the vehicle so you can make any modifications you wish to the vehicle, but just always make sure the vehicle is road legal.

Can I take my van abroad during the Contract Purchase term?

Yes, you will have the original registration document in your name, so taking the vehicle abroad is not a problem.

Am I able to race the vehicle?

In theory, yes, although we wouldn't advise it. If you were to write-off your vehicle you always run the risk of getting into problems if you're insurance company don't pay you as much as you owe on the finance and this then leaves you in negative equity.

Van Insurance

Is my insurance going to go up because I have chosen Contract Purchase?

There is no reason why your insurance premium should go up because you have funded your vehicle on Contract Purchase.

Is insurance included in the Contract Purchase agreement?

No, you are responsible for ensuring the vehicle is insured throughout the whole term of your agreement. On a new vehicle, you will find that most insurance companies will insist on you having fully comprehensive insurance and we recommend this too.

Can I insure the van under my company insurance?

Yes, this is not a problem, but keep in mind that the insurance must be in same name as the contract, whether this is your name, trading name or your limited company name.

Is fully comprehensive insurance compulsory when I take out a Contract Purchase agreement?

No because you own the vehicle, so it is down to you about what level of cover you feel is sufficient. However, being a new vehicle we would always recommend fully comprehensive.

Will I be able to insure other family members to drive the van?

Yes, there is nothing that stops you adding family or friends to your insurance, just as you would normally on any other vehicle.

Can I include insurance in the van Contract Purchase package?

No you can't include insurance in your package, but we are partnered with one of the country's largest commercial insurance companies who will be happy to give you a very competitive quote. Click here for more information: www.vanarama.com/van-insurance.html.

If I am in an accident do you provide a courtesy van?

Normally your insurance company will arrange a replacement vehicle for you if you are involved in an accident (especially if it is not your fault). If not, then your breakdown cover will normally cover you for a vehicle for the first 24/48hrs, after which the body shop, which is repairing your vehicle, should be able to loan you a vehicle.

My New Van

Is there a delivery charge?

No, we offer a free of charge delivery service anywhere in the UK.

What are the colour options?

You will be able to choose from all the manufacturers' colours, just as you would via any main dealer in the UK. Keep in mind we tend to order stock in the most popular colours, so unless it's a rare colour or specification you are considering, we should be able to deliver your vehicle very quickly.

Is Road Tax included with Contract Purchase if not how much does it cost?

The first year's Road Fund Licence is included in your payments but you will be responsible for taxing the vehicle for the remainder of your contract.

Can I transfer my private number plates on a Contract Purchase van?

Yes, because you will have the registration document in your name, you can put a private plate on your vehicle at any time. Please note that it's always worth informing your finance company if you do this so that they have a record of the new number plate.

Are there any admin charges involved?

We do not charge any administration fees, although most of the finance companies we use will issue some form of admin/document fee on your first and/or your last payment. These are often called acceptance fees or option to purchase fees.

What are the hidden costs?

We do not have any hidden costs. Any documentation/admin fees, which might apply, will always be shown clearly on the finance documentation you sign and return.

Is my van coming directly from the manufacturer or a local dealer?

Your vehicle is supplied directly from a UK main dealer who will deliver the vehicle to your door. We have long-term relationships with all of our supplying dealers and they are targeted to match us and provide excellent customer service

What is the time scale for delivery?

Most of the vehicles we advertise are stock/batch vehicles and, from time of order, delivery is approximately 2-3 weeks. To ensure the quickest delivery time possible it does also rely on you sending us everything we require straight away (ie, copy of driving licence/signed order form).

Do I need to be aware of anything when buying a van/pick-up truck online?

Yes, as a business, we are constantly buying and selling vehicles, which require bodywork of some description, so dents and scratches, are not a problem. Just as long as they are mentioned when you describe the vehicle condition to us over the telephone.