Part of: Van Finance
Sole traders and partnerships
Van finance for sole traders
As a sole trader, you are the business. That changes how lenders assess you, how the agreement is set up and, sometimes, whether it is regulated. Here is what to expect.
- An enquiry, not an application
- New and used vans
- Ownership and VAT explained
A sole trader has no separate legal entity, so a van finance agreement is made with you personally, trading under your business name. Lenders therefore look at your personal credit file and your income from self employment together. There is no Companies House record to check, so your tax returns and bank statements carry more weight.
Partnerships work in a similar way. The partners together are the business, and lenders will usually check each partner. If you trade as an LLP, the limited company page is the closer match, because an LLP is a separate legal entity.
One point is easy to miss. Some agreements with sole traders and smaller partnerships fall under the Consumer Credit Act. That brings extra protections and different paperwork, and it affects which lenders and products are available. We cover it below.
Who this suits
This page is for self employed people and partnerships who need a van to work. That might be an electrician or plumber buying a first van, a courier moving from a hired van to their own, or a two partner business adding a second vehicle.
- Sole traders registered for self assessment with HMRC
- Partnerships of two or more people trading together
- Self employed people who are or are not VAT registered
- People moving from employment into self employment who need a van to start
What lenders look at
Because you and the business are the same, a lender's view of you personally is a large part of the decision. Your credit file, your address history and how you manage existing borrowing all count. A missed payment on a mobile phone contract or credit card can matter more here than it would for a company.
Lenders also want to see that the business earns steadily enough to make the payments. Self assessment tax calculations and tax year overviews from HMRC are a common way to evidence income, along with bank statements showing regular takings.
- How long you have been self employed and in the same line of work
- Your personal credit history, including any defaults or judgments
- Income shown on recent tax returns and in bank statements
- Whether you are a homeowner, which some lenders weigh in your favour
- Existing personal and business borrowing
- The van, its age and mileage, and the supplier
What you will need
Keep these ready. If you have only recently started trading, tell us early, because it changes which lenders we approach.
- Your full name, date of birth and three years of address history
- Your trading name and the date you started self employment
- Recent bank statements, usually the last three to six months
- Recent SA302 tax calculations or tax year overviews, if you have filed returns
- Photo ID and proof of address
- Details of the van and the supplier, and any deposit or part exchange
- For partnerships, the same details for each partner
Typical structure
Hire purchase is the most common choice for sole traders. It is easy to follow, you own the van after the final payment, and payments are fixed. If you are VAT registered, VAT on the purchase price is normally paid upfront and may be reclaimed on your VAT return, subject to business use. If you are not VAT registered, the VAT forms part of the cost you finance or pay.
Lease purchase, which adds a balloon at the end, can lower monthly payments. That can help when cash flow is uneven, but the balloon still needs paying, so plan how.
Finance leases are less common for sole traders. Some lenders offer them, but they are designed around VAT registered businesses and, where an agreement would be regulated, availability can be narrower. If a finance lease appeals, we will tell you whether it is realistic for your circumstances.
Tax relief for sole traders depends on how you account for the van. Your accountant will confirm which method applies and what you can claim.
When an agreement may be regulated
The Consumer Credit Act can apply to finance for individuals, which includes sole traders and some partnerships. Whether an agreement is regulated depends on details such as the amount, the purpose and whether an exemption applies. Regulated agreements come with specific pre contract information, rights to withdraw within set periods and rules on early settlement.
This does not stop you financing a van. It means the process and paperwork differ, and some lenders only offer unregulated business agreements. We will tell you which applies before you proceed.
Partnerships
For a partnership, lenders typically need details of each partner and may ask each to sign. If one partner has a weaker credit history, it helps to say so at the start rather than have it surface later. Larger partnerships can fall outside consumer credit rules, while partnerships of two or three partners may be inside them.
Common mistakes
These come up again and again with sole trader van finance.
- Not checking your own credit file before applying. Errors and old addresses can cause problems that are easy to fix in advance.
- Applying with several lenders at once, leaving multiple searches on your personal file.
- Assuming you can reclaim VAT when you are not VAT registered.
- Leaving tax returns unfiled, which makes income hard to evidence.
- Choosing the lowest monthly payment through a large balloon without a plan for the final sum.
- Not telling the broker about a recent change, such as a house move or a switch from employment, which lenders will spot anyway.
Sole traders and partnerships
If you are a sole trader, a partnership of two or three partners, or an unincorporated body, some finance agreements may be regulated under the Consumer Credit Act 1974. A regulated agreement carries extra protections and different paperwork. Whether yours is regulated depends on the amount borrowed, the purpose and any exemptions that apply. We will tell you before you proceed, and the lender will confirm it in the agreement.
Questions we are asked
Can a sole trader get van finance?
Yes. Many lenders finance vans for sole traders. The agreement is with you personally, so your credit history and self employed income are central to the decision.
Do I need to be VAT registered?
No. Non VAT registered sole traders can finance vans. You will not be able to reclaim VAT, so it forms part of the cost.
Is van finance for sole traders regulated?
It can be. Some agreements with sole traders and partnerships of two or three partners are regulated under the Consumer Credit Act, depending on the amount and any exemptions. We confirm this before you proceed.
What proof of income will I need?
Commonly recent bank statements and, where you have filed returns, SA302 tax calculations or tax year overviews. Lenders vary in what they ask for.
Can I get van finance if I have only just gone self employed?
It is possible with some lenders, especially with a deposit or a strong personal credit history. There are fewer options than for established traders. Our new business page covers this in more depth.
Will the van be in my name?
On hire purchase or lease purchase, the van is registered to you as keeper and ownership passes to you after the final payment. Until then the lender owns it.
Related van finance guides
Your business circumstances
Compare finance structures
Choose your van
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.