How much is the deposit on a new vehicle? Your FAQ’s answered!
When looking for vehicle finance, it’s understandable that you will have numerous questions. Cars and vans on finance come with lots of options so it is difficult to know what the best package is for you
Panic over, Car & Van Finance Direct have looked at your most frequently asked questions and put them together in this article for your convenience. From size of deposit to balloon payments, here are your most frequently asked vehicle finance questions answered!
Vehicle finance FAQ’s
’What is the difference between finance lease, contract hire and hire purchase?’
A question we regularly get asked in regards to new van finance, these are the finance options available to you for new vans. All of the van finance options require a deposit, whilst the only way to own your van outright is with a hire purchase agreement. You pay a deposit, then a fixed amount on a monthly basis for the remainder of your contract after which the van is yours to keep.
Contract hire is all about convenience, with maintained and non-maintained agreements available. Again you pay a deposit followed by fixed monthly payments and at the end of the term you simply hand the van back, this is the same for car contract hire or car leasing.
If you want a payment schedule that is flexible and payments deducted to reduce taxable profits and to renew your van every few years or so, then finance lease may be the best options for you. You pay a deposit followed by monthly repayments for the duration of your agreement followed by a final ‘balloon’ payment at the end, this is covered by the sale of the van to a third party.
’What is a balloon payment?’
This is effectively a final payment at the end of a contract and is required at the end of a finance lease agreement. This is used to reduce the monthly cost and is equal to the predicted final value of the van at the end of the contract (calculated based on age and projected mileage of the van). Legally you are required to sell the van to cover the balloon payment with finance lease.
’How much deposit am I required to pay?’
This depends on the finance type. Hire purchase deals usually require a 20% deposit (equal to the VAT), this is reclaimable if you are VAT registered. Finance lease and contract hire deals (both cars and vans) usually require a minimum deposit of 3 monthly rentals, however you can opt to pay more to bring monthly prices down.
’How long can I lease or hire a new vehicle for?’
Terms for both cars and vans range from 2 to 5 years. This is the same across all of our car finance and van finance options.
’Do you accept part exchange?’
Unfortunately as we are an online only business we are unable to accept vehicles in part exchange.
’Do you sell second hand vehicles?’
Unfortunately not, we are an online based company which supplies new cars and new vans only.
’What is the lead time on this vehicle?’
If the vehicle that you have opted for is in stock, we can get it delivered in as little as five working days, our vehicle finance experts will be able to advise you of this. If your car or van is a factory order then lead time may vary. We will keep you updated on this every step of the way!
’Can I pay cash?’
We do have a number of vans in stock that can be purchased for cash, however due to operating restrictions we only offer leasing with our range of new cars. You can discuss your car and van requirements with our vehicle finance experts.
’Can I get vehicle finance if….?’
This question gets asked in a number of ways so we thought we would address these.
Bad credit. All vehicle finance applications regardless of which finance option you opt for are subject to a credit check, you will need to pass this to be approved. Finance companies will look at criteria when determining eligibility for finance including: 3 year address history, credit items in the past three years, UK residency, full UK driving licence, proof of income and no current mortgage arrears or CCJ’s. For business agreements you’ll also require a proof of positive trading and a director who can sign as a guarantor.
Sole traders or new businesses regularly ask if their status makes them ineligible for finance, just because you fall into either of these categories doesn’t mean you are necessarily ineligible for vehicle finance. Finance companies will be looking for the factors we have mentioned above first and foremost.
Not VAT registered. This again won’t affect your eligibility, it just means you won’t realise the tax benefits which would come with being VAT registered.
New vehicles on finance
Looking for a new car or van on finance? Your search is over! Car & Van Finance Direct are the home of new vehicle finance, with a massive range of new cars and vans available, as well as a number of flexible vehicle finance options. Simply fill in a contact form or call us on 02920 789234 to get the ball rolling today!