Van Finance for Self-Employed Traders: What Lenders Look For and How to Get Approved

Van finance, when you are self-employed or a sole trader, can be quite difficult to get. You don’t have payslips to show, your budget is tight, and you need to balance business needs and daily life expenses. In the UK, as of 2025, there are 3.2 million sole traders who, like you, might feel lost when looking for van finance. 

Getting van finance doesn’t need to be a headache. This guide is designed to support you step by step, helping you feel guided and confident as you understand what lenders look for and how to get approved, addressing common anxieties self-employed traders may have. 

Key Takeaways:

• You can get van finance if you are self-employed.

• Hire Purchase and Finance Lease offer advantages in terms of tax treatment. 

• You should get your documentation (SA302s, Tax Year Overviews and bank statements)  in order before applying 

• Lenders will carry out a hard credit search at the application stage

• Consulting a van finance broker is the best way to get the best deals. 

Your Finance Options Explained 

Let’s start with the different types of financing available to sole traders and self-employed workers who are looking to finance a commercial vehicle. 

 *PCP is quite rare for vans, but here at Octane Finance we have a lender exclusive to us that offers PCP for van purchases. 

Overall, there are a few key points to keep in mind: 

• If you are self-employed, Hire Purchase (HP) is a great option for van financing, as you can claim tax relief through Capital Allowances on the vehicle cost, and deduct interest payments as business expenses. You can claim this on your business’s tax return. 

• If you are VAT-registered, Finance Lease will allow you to reclaim 100% of the VAT on rental payments, provided you use the van solely for business purposes.

• An experienced broker will be able to compare financing options from a range of dealers, ensuring you get the best possible deal. 

The Self-Employed Trader Dilemma When Getting Van Finance 

Being a self-employed trader comes with its own set of challenges, and there’s no point in denying that lenders look at self-employed workers differently. However, this shouldn’t stop you from seeking the right van financing that suits your business's needs, rather than settling for poor financing just because you are worried about being rejected due to being self-employed. Let’s look at some of the anxieties that, as a van finance broker, we hear from self-employed traders. 

Why do lenders look at self-employed applicants differently? 

From a lender's perspective, self-employed applicants pose a higher risk. For a lender, being self-employed is a synonym of income unpredictability, meaning that lending is betting on whether or not you will be able to adhere to the repayment plans. 

Proving your income is also not as easy as providing a payslip; lenders will require you to provide your net profits, not just your turnover. To prove your income, you need to provide specialised documentation such as tax overviews and SA302s. Being unable to provide this paperwork often diminishes the trust lenders place in your ability to stick to repayments. 

The bottom line is that being self-employed poses a higher risk to lenders, which is why having all the right paperwork is key to getting the best van financing for your circumstances. 

What counts as proof of income? 

Lenders are usually more willing to offer finance to self-employed traders who can prove 1-3 years of trading history, although some specialist lenders offer finance to those with less history. A van finance broker can help you select the right lender, but regardless of your circumstances, there are some key documents you need to show to prove your income. 

• SA302: This form provides a lender with the HMRC tax calculation, providing a breakdown of your income sources and how your tax is calculated 

• Tax Year Overview: This document shows the amount of tax paid or due for that financial year and shows whether your SA302 was correct. 

• Bank Statements: Lenders often require 3-6 months' bank statements, both from personal and business accounts, to prove turnover and affordability

If you have an accountant, a letter from them will lend more credibility to your case, as the lender can verify your earnings with a professional. 

How to overcome the low on paper profits? 

Often, self-employed traders feel like they’re hitting a brick wall when it comes to borrowing money for van finance because their profits look low on paper. As van finance brokers, we know your reality is different from what it looks like on paper, but lenders need to know that, too. 

The good news is that there are specialist lenders who will take a more holistic approach and, in addition to your documentation, will also look at retained profits and overall turnover. 

A finance broker can help you find the right dealer. At Octane Finance, with a vast network of UK lenders, we can help you find the right lender even when your earnings look low on paper. 

How long do I have to trade before I can apply for van finance?

Lenders who offer van finance will want at least 1 year of trading history, but the more, the better. Usually, better deals come when you can provide 2 or 3 years of trading documentation. Trading history is important for lenders because it’ll help them understand how reliable your income is, and how likely you are to stick to long-term repayments. 

However, you can still get van finance without a trading history, especially if you are just starting up. This often requires you to provide alternative proof of income, such as your personal bank statements and a higher up-front payment to mitigate the risk the lender would be taking on. They might also require you to provide details on upcoming jobs and contracts. 

A Bad Credit Score Doesn’t Disqualify You From Van Finance

The number one question self-employed and employed traders ask is if it’s still possible to get van finance with poor credit, and the answer is yes, you can. 

We’re going to take a look at the various things that lenders check when considering offering you a finance deal, and the other worries that people looking to get finance usually have when it comes to credit scores. 

What lenders actually check 

Most lenders will look at key factors to assess your financial situation. These are pretty standard things, but if you have poor credit, these checks can cause anxiety. 

Let’s unpack them. 

• Credit history: Lenders will run a credit check to assess your payment history and how you’ve used your credit. Overall, they are looking for missed payments or anything that could potentially signal a higher risk. 

• Bank statements: Your bank statements are interesting to lenders because they allow them to understand your overall financial situation, including your outgoing payments, and assess how affordable and viable it would be for you to take on more credit. 

• Income: They will review your income sources and earnings, which is why having your documentation in place is so important.

• Identity and Address: Lenders will verify that you are who you say you are, so that they will ask for proof of address and an identity document. 

• Van details: You’ll need to provide the details of the van you want to purchase so they can assess its market value. 

Soft and Hard Search, your anxieties solved

If you have bad credit, the idea of a hard search can be pretty intimidating, given that it will have a lasting impact on your credit history. 

Most lenders and brokers will start with a soft search to gain an initial understanding and assess eligibility criteria. Soft searches usually provide identity information and basic financial data, such as CCJs and estimated eligibility. Soft searches are nothing to worry about as they are only visible to you and not other lenders and won’t affect your credit score. 

Once you are ready to apply for finance, a hard search will take place, usually carried out by the lender rather than the broker. A hard search will provide your full credit history, missed payments, debts and outstanding financial obligations. A hard search is visible to other lenders and will usually lower your credit score for a short period. It will stay on your report for 1 or 2 years. 

The bottom line is that as long as you don’t get too many hard searches carried out in a short period of time, you will be fine. Consulting a broker is usually a good place to start, as they are experts when it comes to finding the right finance deals for whatever your circumstances might be. 

The Right Finance Deal Can Save You Money In Tax 

Most traders don’t consider tax implications when comparing finance deals, but as a self-employed trader, you could be missing out on saving money if you select the wrong deal. 

Annual Investment Allowance on Hire Purchase

If you select Hire Purchase to finance your van, you could deduct the van's cost from your taxable profit in the year of purchase under the Annual Investment Allowance (AIA). This is an attractive prospect for those traders who want to own their van and save money at the same time. 

To be eligible, your commercial vehicle must be bought and used for business purposes. If you use your van 70% for business and 30% for personal use, you can only claim 70% of the cost back through AIA. The other thing to keep in mind is that the interest you pay cannot be claimed under AIA and is treated as a separate expense. 

You cannot use AIA if you decide to lease a van, as you will never own it, and to claim AIA, you must own or be paying to own the vehicle. In case of leasing, your monthly rental costs are treated as a business expense and can be deducted in the year they are paid. In that case, your tax relief is spread evenly rather than saving you a larger amount in one go. Which one is best will depend on your circumstances, and a van finance broker will be able to help you assess that. 

VAT reclaim: the advantage most traders miss

If you're VAT-registered, buying a commercial van for business use means you can reclaim 100% of the VAT on the purchase price before any income tax relief. On lease payments, you can typically reclaim 50%, rising to 100% if there's no private use. This single advantage makes leasing significantly cheaper in real terms for VAT-registered traders than the headline monthly figure suggests.

Tax rules change. Always speak to your accountant before making a financial decision.

How A Good Van Finance Broker Will Save You Time and Money 

A broker acts as a bridge between you and your van finance deal. As a self-employed trader, a broker can be the single most effective part of getting your dream van. Rather than representing a single lender, a broker has access to a panel of lenders across the market, including specialist providers who understand self-employment, irregular income, and the realities of a self-employed trader. A broker has all the tools to get you a van finance deal that fits your circumstances.

If you have a poor credit score and you are worried about hard searches, consulting a broker will be the single most useful thing you can do. A good broker will assess your situation and match you to suitable lenders before any hard credit check takes place. This protects your credit score, which is useful if your score is already under pressure or are planning to apply for a mortgage. 

Brokers also understand how lenders read self-employed applicants. They know that a low profit figure caused by legitimate expense claims looks very different to a lender who understands sole trader finances. A broker can help you present your application in the strongest possible light to a lender who already understands the challenges that self-employed traders face. 

Overall, consulting a broker provides a stress-free process and a higher success rate.

You can find out now how much you could borrow using our finance calculator. You just need to add a reg, and you’ll receive a quote in minutes.  

Let Us Find The Right Lender For You

We want to make sure you get the best van finance deal, and our experienced team is here to deliver just that. We can guide you through your options and help you choose the right finance deal that meets your needs. 

With over 2,000 5-star reviews on Trustpilot, we provide expert advice and outstanding customer service. Based in Essex, Octane Finance has a vast network of lenders across the UK that could be the right lender for you. 

You can contact us or visit us in Rayleigh, Essex, and we will lead you to the right lender. 

FAQ

Can I get van finance with 1 year of accounts? Yes, some lenders will consider applications with just one year of trading history, though your options will be more limited than if you had two or more years of accounts. 

Can I get van finance with no deposit? No-deposit van finance does exist, but it comes at a cost as lenders offset the higher risk with a higher APR and larger monthly payments, meaning you pay more over the term overall. 

Will van finance affect my mortgage application? Van finance will appear on your credit file and is factored into any affordability assessment a mortgage lender carries out.

What happens if I can't make a payment? If you miss a payment, contact your lender as soon as you know there is a problem, as most have hardship provisions and would rather restructure than repossess. 

Can I finance a van bought from a private seller? Yes, but your options are narrower than if you were buying from a dealer, as many mainstream lenders will only finance vehicles sold through registered dealerships.