Finance for Electric Vans: Your UK Guide

Why This Guide Matters

Electric vans are fast becoming a central part of the UK’s transportation landscape. With businesses and individuals alike under pressure to reduce emissions, the shift to electric vehicles (EVs) is gathering pace. Yet, for many, the upfront cost remains a significant hurdle. That’s where finance comes in—helping drivers and businesses make the switch without draining their capital.

Understanding your finance options isn’t just about getting a van on the road. It’s about ensuring you’re making a cost-effective, future-proof decision. With government incentives, changing regulations, and evolving technology, the choices can be overwhelming. This guide is here to demystify electric van finance, giving you the clarity and confidence to make the right move for your needs.

The Basics Explained

When it comes to electric van finance in the UK, there are several key concepts to grasp:

• Personal Contract Purchase (PCP): A flexible option where you pay lower monthly instalments, with an option to buy the van outright at the end.

• Hire Purchase (HP): You pay a deposit, then fixed monthly payments. At the end of the term, the van is yours.

• Leasing: You rent the van for a fixed period, then return it. No ownership, but often lower commitments.

• Business Contract Hire (BCH): Tailored for companies, this is a long-term rental that keeps vans off your balance sheet.

Each route comes with its own blend of benefits, costs, and commitments. With electric vans, you’ll also need to factor in government incentives such as the Plug-in Van Grant, which can reduce the vehicle’s cost by up to 35% (subject to a cap). The combination of finance terms and grants can make electric vans more accessible than you might expect.

How It Affects You

The right finance decision affects more than just your monthly outgoings. Here’s what’s at stake:

• Cash Flow: Spreading the cost means you avoid tying up capital, freeing resources for other needs.

• Tax Efficiency: Certain finance structures, such as BCH, may allow VAT and lease payments to be written off against profits if you’re a business user.

• Future Value: With rapid improvements in battery technology, the resale value of electric vans is still stabilising. Finance can provide certainty—particularly with options like PCP, which give you flexibility at contract end.

• Running Costs: Electric vans are typically cheaper to run and maintain. Lower fuel and fewer moving parts mean fewer surprises on your balance sheet.

• Environmental Impact: Opting for an electric van isn’t just good PR. For companies, it can also mean access to zero-emission zones and reduced road taxes.

By understanding how finance terms shape these factors, you can tailor your choices to your circumstances—whether you’re a tradesperson needing reliability or a fleet manager focused on sustainability.

Our Approach

At Kandoo, our role as a retail finance broker is to help you cut through the noise. We work with a panel of trusted UK lenders, offering access to a wide spectrum of finance products. Here’s how we guide our clients:

• Personalised Assessment: We start by understanding your business needs, budget, and how you plan to use the van. This ensures the options we present are relevant.

• Comparative Analysis: Our team compares rates, terms, and incentives across multiple lenders, highlighting not only the lowest monthly payments but the total cost of ownership.

• Explaining the Fine Print: We clarify the details, from balloon payments in PCP deals to mileage limits on leases, so you know exactly what you’re signing up for.

• Government Incentives: We factor in grants and tax breaks, ensuring you maximise available savings—crucial for electric vans, which benefit from unique incentives.

• Transparent Advice: Our recommendations are impartial. We’re not tied to any manufacturer or single lender, so we focus solely on your best interests.

• Ongoing Support: Electric vehicles are evolving fast. We keep clients updated on regulatory changes, new incentives, and end-of-term options, ensuring your finance remains fit for purpose.

Our goal is to empower you—whether you’re transitioning a fleet or buying your first electric van—to make informed, confident decisions.

Before You Decide

Before entering into any finance agreement for an electric van, take time to consider:

• Total Cost of Ownership: Factor in insurance, charging infrastructure, tax, and maintenance—not just the monthly payment.

• Usage Patterns: How far do you drive daily? Make sure the battery range matches your needs.

• Charging Access: Do you have off-street parking for a home charger, or will you rely on public networks?

• Regulatory Changes: Keep an eye on local low-emission zones and tax incentives, which may change over time.

• Exit Terms: What happens if your needs change? Understand early settlement terms and end-of-contract options.

A table can help clarify some key considerations:

Making an informed choice now will help you avoid surprises later.

What’s Real, What’s Hype

There’s a lot of buzz around electric vehicles, but it’s important to separate the facts from the marketing:

“Electric vans are always cheaper.” Not necessarily—while running costs are generally lower, finance deals can vary. Always do the maths.

“Charging is a headache.” Public infrastructure is expanding rapidly, and home or workplace chargers are increasingly accessible.

“Incentives last forever.” Incentives can change with little notice. Act promptly if you want to take advantage.

Stay sceptical. Review each offer on its own merits, and don’t be swayed by headlines without checking the fine print.

Pros & Cons

Here’s a balanced look at the key advantages and drawbacks:

Pros:

• Lower running costs

• Reduced environmental impact

• Access to tax breaks and grants

• Quiet, smooth driving experience

• Future-proofing against emission regulations

Cons:

• Higher upfront cost (even with grants)

• Limited range vs. diesel models

• Charging infrastructure still growing

• Potential uncertainty over long-term resale value

The right balance will depend on your specific business or personal needs.

Other Options to Consider

Electric van finance isn’t the only way to get behind the wheel. Consider these alternatives:

• Outright Purchase: If you have available capital, buying outright avoids finance costs, though you’ll bear full depreciation risk.

• Traditional Diesel or Petrol Vans: Still cheaper upfront, but potentially subject to future restrictions and higher running costs.

• Used Electric Vans: Lower purchase price, but check battery health and warranty.

• Salary Sacrifice Schemes: Some employers offer EVs as part of benefits packages, reducing tax and NI for employees.

• Car Clubs and Short-Term Hire: Ideal for occasional use without long-term commitment.

Each route has its merits. Compare them against your usage patterns, cash flow, and long-term plans.

FAQs

Q: Are there specific finance deals for electric vans? A: Yes. Many lenders now offer products tailored to EVs, often with lower rates or added incentives. Grants can also reduce the total cost.

Q: How does the Plug-in Van Grant work? A: It can cover up to 35% of the purchase price (up to £2,500 for small vans, £5,000 for large vans). Dealers usually apply the grant at point of sale.

Q: What happens at the end of a PCP or lease? A: With PCP, you can pay a final “balloon” payment to own the van, hand it back, or sometimes part-exchange. With leases, you return the van.

Q: Will I save money switching to electric? A: Typically, yes, on fuel and maintenance. However, calculate total costs, including finance and charging, to be sure.

Q: What about charging? A: Home and workplace charging are convenient if you have access. Public networks are expanding, but check local availability.

Q: Are electric vans suitable for long distances? A: Most are best for urban and regional use. For longer distances, check the model’s range and charging options carefully.

Q: Is insurance more expensive for electric vans? A: Sometimes, due to higher repair costs or specialist parts. Shop around—some insurers now specialise in EV cover.

Q: Do I need a special licence to drive an electric van? A: For most models, a standard UK driving licence is sufficient. Heavier vans (over 3.5 tonnes GVW) may require additional entitlements.

Next Steps

Ready to explore your options? Start by listing your priorities—budget, mileage, business needs. Compare finance offers, and don’t hesitate to ask questions. At Kandoo, we’re here to help you navigate the process and secure the right deal for your transition to electric mobility. Contact us today for tailored advice and a no-obligation quote.