Part of: Van Finance
Electric and plug-in vans
Electric van finance
Financing an electric van uses the same structures as a diesel van. What changes is the price, the way lenders think about value at the end, and the running costs you plan around.
- An enquiry, not an application
- New and used vans
- Ownership and VAT explained
An electric van is usually financed on hire purchase, finance lease or lease purchase, exactly like a diesel. The agreement does not care what powers the van. What lenders do care about is how much the van costs, how its value will hold over the term and whether the business can comfortably meet the payments. Electric vans raise particular questions on each of those points, so it pays to understand them before choosing a structure.
The purchase price of an electric van is often higher than a comparable diesel. That can mean a larger amount to finance, and on hire purchase a larger VAT sum at the start. Against that, many businesses expect lower energy and maintenance costs over the van's working life. Whether that trade works for you depends on your routes, your mileage and where the van is charged.
Government support for plug-in vans has existed for several years, but eligibility, amounts and end dates have changed over time. We do not quote figures on this page because they can change. Check the current position on GOV.UK before relying on any grant in your numbers.
Who this suits
Electric vans work best where daily mileage is predictable and the van returns to a base where it can be charged. Urban delivery, local trades and service rounds are common examples. Businesses operating in or near clean air or low emission zones often look at electric vans for that reason too.
They suit less well where daily mileage is long and unpredictable, where the van tows or carries heavy loads for long distances, or where charging at base is not possible and public charging would be the only option.
- Businesses with regular, mostly local routes
- Operators who can charge at a depot or at home overnight
- Companies with customers or contracts that ask about emissions
- Businesses replacing vans on a cycle that want to test electric on part of a fleet first
What lenders look at
Lenders assess the business and the people behind it in the usual way. The difference is in how they view the van. Residual values for electric vans have moved more than for diesel vans in recent years, and some lenders are more cautious about the value at the end of the term, particularly where a balloon or residual rental is involved.
Battery condition matters on used electric vans. Some lenders ask for a battery health report, and some limit the age or mileage they will finance. Manufacturer battery warranties are often separate from the main vehicle warranty, so check what remains.
- Trading history, credit profile and existing commitments
- The van's price and the lender's view of its value at the end
- For used vans, battery health and remaining battery warranty
- Whether any grant has been applied at the point of sale
- Expected annual mileage and the type of work
What you will need
As well as the usual business and identity documents, have these ready.
- A quote or order form showing the price and any grant applied by the dealer
- For used electric vans, any battery health report and warranty details
- An idea of where and how the van will be charged
- Recent business bank statements and accounts if available
- Details of any deposit or part exchange
Typical structure
Hire purchase suits businesses that want to own the van and keep it for its working life. On a higher priced electric van, VAT paid upfront can be a significant sum. A VAT registered business can usually reclaim it, subject to business use, but there is a gap between paying and reclaiming that needs to be covered.
A finance lease spreads VAT across the rentals and keeps the van off your ownership, which some businesses prefer while electric van values settle. You do not own the van, and the end of term options depend on the lender.
Lease purchase lowers the monthly payment by deferring a balloon. Be cautious with electric vans here. If the van is worth less than the balloon at the end, you will need to fund the difference. Refinancing the balloon or selling the van to cover it is never guaranteed.
The plug-in or zero emission van grant
The government has run a plug-in van grant, which current guidance also describes in zero emission van terms. It applies to eligible new vans at first registration and is usually applied by the dealer or manufacturer as a discount at the point of sale rather than paid to you afterwards. Which vans qualify, how much is available and how long the scheme runs have all changed over time.
We do not state amounts or end dates here. Check the current scheme on GOV.UK, and ask the dealer to show any grant clearly on the quote so the amount financed is correct. A lender finances the price after any grant has been applied.
Charging and running costs
Charging at a depot or at home on a business tariff is usually cheaper than relying on public rapid chargers. If drivers take vans home, decide how home charging will be reimbursed. Charger installation is a separate cost and is not normally part of van finance, though some lenders can finance equipment separately.
Tax treatment of electric vans has its own rules, including for capital allowances and benefit in kind where a driver has private use. Your accountant should confirm how these apply.
Common mistakes
These come up most with electric van finance.
- Building a grant into the budget without checking current GOV.UK eligibility and availability.
- Setting a large balloon on an electric van without considering how values may move.
- Assuming a used electric van has full battery warranty remaining.
- Ignoring the cost and time of installing a charger at base.
- Choosing range based on brochure figures rather than real winter and laden use.
Official sources
Rules, eligibility and availability change. Check the current position here before relying on it.
Questions we are asked
Can I finance an electric van the same way as a diesel van?
Yes. Hire purchase, finance lease and lease purchase are all available for electric vans. Lenders may take a more cautious view of the van's value at the end of the term.
Is there a government grant for electric vans?
There has been a plug-in grant for eligible vans, usually applied as a discount by the dealer. Eligibility, amounts and availability change, so check the current scheme on GOV.UK before relying on it.
Can I finance a used electric van?
Yes, with many lenders. Some ask for battery health information and set limits on age and mileage. Check what remains of any battery warranty.
Is a balloon sensible on an electric van?
It can lower payments, but if the van is worth less than the balloon at the end you need to fund the difference. Plan for paying it without relying on a sale or refinance.
Can the charger be included in the finance?
Not usually within the van agreement. Some lenders finance charging equipment separately. We can discuss that alongside the van.
Are electric vans better for tax?
Electric vans have specific tax rules, including for capital allowances and private use. Your accountant should confirm how they apply to your business.
Related van finance guides
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VAT and releasing capital
This page is general information, not tax, accounting or legal advice. Tax and VAT treatment depends on your circumstances and can change. Speak to your accountant before choosing a structure. Finance is subject to status and lender approval.
Who you are dealing with
A broker, regulated, and clear about it
Sorbus Finance Limited is an appointed representative of Moorgate Finance Limited, which is authorised and regulated by the Financial Conduct Authority (firm reference number 662419). We are a credit broker, not a lender.
We work with a panel of lenders that includes high street banks, specialist asset finance lenders and manufacturer linked finance houses. Each has its own criteria, so part of our work is matching your business to the lenders likely to say yes, rather than applying everywhere.
Not all commercial finance activities or agreements are regulated by the Financial Conduct Authority. Regulatory protections depend on the activity, agreement and customer circumstances.