Should I finance a used van over three years or five years?
Compare both terms against the van's expected use and the business's cash flow. A longer term spreads the balance over more instalments but may increase the total finance cost. This used Peugeot Expert transaction ran over three years. The right comparison includes the whole amount payable and the vehicle's likely age and condition when the agreement ends.
Read about van and fleet finance →Customer situation
A machinery installation company in South Yorkshire, trading since 2012, buying a used 2022 Peugeot Expert panel van with 19,000 miles on it. £17,689 before VAT.
The challenge
Nothing about the van was difficult. The question worth getting right was the term.
Most van agreements run four or five years, because a longer term produces a smaller monthly figure and that is what most quotes compete on. It is not automatically the better deal. A shorter term means a higher payment and less interest paid overall, and it suits a business that would rather own the thing outright sooner — particularly on a van already three years old when the agreement starts.
What we did
Fixed-rate hire purchase over 36 months, with £17,888 financed. There was no capital deposit, but the VAT was paid at the start — so there was still a four-figure payment on day one even though the van itself was funded in full.
One detail worth noticing: the amount financed is slightly higher than the price of the van. A small amount of non-VATable cost sat alongside the purchase and was financed with it. It is a minor thing, but a quote that quietly rounds it away is a quote that will not match the agreement, and the time to spot that is before signing rather than after.
Key outcome
A three-year-old van funded in full over three years, owned outright at the end of it, and a lower total cost of finance than a longer term would have produced.
“Everyone asks what the monthly payment is. The better question is what the term should be, because that is the biggest single lever on what the finance actually costs you. A longer term is not a better deal, it is a different one.”
— Conor, CW Asset Finance
Every application is assessed on its own merits and all finance is subject to status and lender approval. This is one client’s outcome and is not a guide to what any other business will be offered.
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