What deposit is usually needed for business vehicle finance (HP, lease or BCH)?

Table of contents
– Quick answer — summary and next steps
– What type of vehicle finance are we talking about?
– Typical deposit ranges — at a glance
– What affects how much deposit you’ll be asked for
– How each finance product treats deposits and initial payments
– Hire Purchase (HP)
– Finance lease / asset finance
– Business Contract Hire (BCH) / Contract hire
– Real‑world examples
– How to reduce or avoid paying a cash deposit
– What lenders and brokers will check during assessment
– Costs to consider beyond the deposit
– How UK Business Loans can help
– Frequently asked questions
– Final next steps

Quick answer — summary and next steps
Need a new van or fleet but unsure how much deposit you’ll need? Typically deposits vary by product and business circumstances. Expect roughly:
– Hire Purchase (HP): 5%–30% (most commonly 10%–20%)
– Finance lease / asset finance: 0%–15% (some offers allow zero deposit)
– Business Contract Hire (BCH): 0%–10% (sometimes an “initial rental” of multiple months)

Most small and established limited companies pay 5%–20% depending on credit, trading history and vehicle type. If you want tailored options, Get Quote Now — Free Eligibility Check and we’ll match you to lenders and brokers who can offer relevant deposit options.
UK Business Loans is an introducer and does not provide regulated financial advice. We connect businesses with lenders and brokers. Completing an enquiry does not commit you to borrow and will not affect your credit score.

What type of vehicle finance are we talking about?
There are three common commercial vehicle funding routes for businesses that want vehicles outright or on contract terms:

– Hire Purchase (HP) — you usually take ownership at the end of the agreement after the final payment. Deposits are commonly required and reduce the amount financed.
– Finance lease / asset finance — the funder (lessor) retains ownership; deposits can be low or zero but tax and VAT treatment differ from HP.
– Business Contract Hire (BCH) / Contract hire — a lease for a fixed term with an agreed mileage; BCH often has a low or zero deposit but may use an initial rental (a lump sum equivalent to several months’ payments).

If you’d like more detail on our vehicle offering, see our vehicle finance resource on vehicle finance.

Typical deposit ranges — at a glance
(Designed to be easy to scan)

– Hire Purchase (HP): 5%–30% of the vehicle price. Most common: 10%–20%.
– Finance lease / asset finance: 0%–15%. Some specialist lenders accept 0% with slightly higher monthly charges.
– Business Contract Hire (BCH): 0%–10% equivalent, or 1–12 months’ initial rental depending on the deal.
– Fleet purchases: Pricing is frequently negotiable — larger purchases often attract lower upfronts per vehicle.

Note: these are typical ranges. Individual offers depend on credit, vehicle age/condition, mileage, term, and whether the business is VAT‑registered.

What affects how much deposit you’ll be asked for
Several commercial and product factors influence deposit size:

Business credit profile and director/security requirements
– Strong company credit and trading record reduce perceived lender risk, so lenders often ask for smaller deposits. Newer companies or those with poor credit may face higher upfronts or personal guarantees.

Company trading history and turnover
– Established limited companies with solid turnover usually secure lower deposits. Start-ups and very new businesses commonly face higher deposits or additional security.

Vehicle age, make and residual value
– New, low‑depreciation vehicles typically attract smaller deposits. Older or specialist vehicles (conversions, refrigerated units) are higher risk and may require larger deposits.

Term length and mileage
– Shorter terms and low‑mileage profiles usually reduce lender risk and may reduce deposit requirements. High‑mileage BCH deals can increase initial costs.

VAT, ownership and tax treatment
– Buying on HP means you may reclaim VAT (if eligible) differently from BCH, where VAT is often included in monthly payments. VAT status can affect cashflow and deposit planning.

Sector and vehicle use
– High‑risk sectors (heavy construction use or vehicles in hazardous environments) or vehicles used for hire and reward may attract higher deposits.

Practical tip: have three months’ bank statements, recent company accounts and VAT documents ready — brokers often secure better terms when paperwork is available.

How each finance product treats deposits and initial payments

Hire Purchase (HP)
– Mechanics: You pay a deposit (optional amount set by lender), then fixed monthly repayments until full ownership transfers after the final payment.
– Why deposit matters: A higher deposit reduces the financed capital, lower monthly payments and total interest paid.
– Example: On a £20,000 van a 15% deposit is £3,000. You then finance £17,000 across the term.
– Considerations: Newer companies may be asked for a higher deposit or director guarantees. HP usually suits businesses that want to own the vehicle at the end of the term.

Finance lease / asset finance
– Mechanics: The lessor retains ownership; you effectively pay to use the asset. Some lenders call an upfront payment a capital contribution.
– Deposit options: Many lessors offer low or zero deposit deals, but monthly costs or maintenance packages may change to compensate.
– Pros/cons: Lower initial outlay preserves cash but can be more expensive over the term. Check accounting and VAT treatment with your accountant.

Business Contract Hire (BCH) / Contract hire
– Mechanics: BCH is a term contract based on mileage and condition expectations. The initial payment is often termed an “initial rental.”
– Initial rental: This may be 1–12 months’ worth of payments. A higher initial rental reduces monthly payments.
– Typical users: BCH is common for fleet operators wanting predictable monthly costs and off‑balance operating leases.
– Considerations: Early termination, excess mileage and damage charges can be costly — read the contract carefully.

Real‑world examples
– Local builder (single van, HP): Pays a 10% deposit on a brand‑new van (£2,500 on a £25,000 van). The deposit reduces monthly payments and interest; the business intends to own the vehicle after the term.
– Courier fleet (BCH, 25 vehicles): Uses BCH with a three‑month initial rental and maintenance package. Upfront cash is low per vehicle though the initial rental is effectively a multi‑month prepayment.
– Start‑up landscaping firm (used vans, asset finance): Lender requests a 20% deposit on three ex‑demo vans because of limited trading history. The higher deposit secured approval and reasonable monthly payments.

If you want quotes tailored to examples like these, Get Quote Now — Free Eligibility Check.

How to reduce or avoid paying a cash deposit
If you’d prefer to conserve cash, consider these approaches:

– Compare offers via brokers: Brokers can find lenders who accept low or zero deposit deals.
– Trade in or part‑exchange: Use a vehicle’s trade‑in value to reduce the required cash deposit.
– Accept a higher monthly payment or longer term: Spreads the cost but increases total interest.
– Negotiate the BCH initial rental: You can sometimes structure a smaller initial rental in return for slightly higher monthly payments.
– Improve your business credit and provide documentation: Strong accounts and bank statements often lower deposit requirements.
– Consider different product: Lease deals and certain finance lease structures can avoid a large cash deposit.

Get matched to lenders and brokers offering low‑deposit or zero‑deposit options by completing a quick enquiry — Free Eligibility Check.

What lenders and brokers will check during assessment
Typical information requested during pre‑qualification:
– Identity and proof of business address
– Company registration documents and director details
– Bank statements (usually 3 months)
– Recent company accounts or management accounts
– VAT registration (if applicable)
– Details of the vehicle(s), mileage and intended use
– Credit checks (initial soft checks may be used; full checks occur later)

Note: preliminary enquiries usually do not affect your credit score; final credit checks may be performed by lenders before offers are made.

Costs to consider beyond the deposit
Don’t focus on the deposit alone — factor in:
– Interest rates and total cost of finance
– Maintenance, servicing and tyres (often offered in packages)
– Insurance and road tax
– Excess mileage and damage charges for BCH
– Early termination penalties and balloon payments (if applicable)
– VAT treatment and accounting impact

Always ask for a full quotation and terms before agreeing to any deal.

How UK Business Loans can help
We connect businesses seeking vehicle finance (from around £10,000 upwards) with lenders and brokers best suited to their needs. Our free, no-obligation matching service saves time and helps you compare real offers quickly. Complete a short enquiry and we’ll introduce you to partners who can provide tailored quotes and discuss deposit options. Get Started — Free Eligibility Check

We are an introducer and do not provide regulated financial advice. Completing an enquiry does not commit you to borrow and will not affect your credit score.

Frequently asked questions
Do all lenders require a deposit for hire purchase (HP)?
Not all do, but many prefer a deposit to reduce the financed amount. Typical HP deposits range from 5%–30% depending on credit, company age and vehicle value.

Can I get vehicle finance with no deposit?
Yes. Some funders and leasing companies offer zero‑deposit or zero‑initial rental options. These often come with higher monthly costs or different contract terms.

What’s the difference between a deposit and an initial rental?
A deposit reduces the financed capital for HP or leases. An initial rental (BCH) is an upfront payment usually equal to several months’ lease payments and acts like a prepaid instalment rather than reducing the vehicle price.

Will a deposit affect VAT reclaim?
VAT treatment depends on whether you buy or lease and your VAT status. VAT on purchase deposits may be reclaimable for VAT‑registered businesses; BCH VAT is often included in monthly payments. Check with your accountant.

Can I use a trade‑in as a deposit?
Yes — many finance providers accept part‑exchange or trade‑in values to reduce the cash deposit required. Terms and valuations vary.

How long does it take to get a quote?
Using our matching service you can usually receive an initial response within hours; full lender quotes often take a day or two depending on paperwork and checks.

Final next steps
If you’re ready to compare deposit options and get real quotes, Get Quote Now — Free Eligibility Check. It takes a few minutes to complete and it’s free and non‑binding. Submitting an enquiry does not commit you to borrow and will not affect your credit score.

Written by UK Business Loans — we match UK businesses to trusted lenders and brokers for vehicle and commercial finance. Last updated: [insert date]

1. How much deposit is usually required for business vehicle finance (HP, lease or BCH)?
Typically HP requires 5%–30% (most commonly 10%–20%), finance lease 0%–15% (some 0% deals) and BCH 0%–10% or 1–12 months’ initial rental depending on credit, vehicle and term.

2. Can I get vehicle finance with no deposit?
Yes — some lenders and leasing companies offer zero‑deposit or zero‑initial‑rental business vehicle finance, although this usually increases monthly payments or overall cost.

3. What’s the difference between a deposit and an initial rental on BCH?
A deposit reduces the capital financed (common on HP), whereas a BCH initial rental is a prepaid lump sum of several months’ lease payments rather than cutting the vehicle price.

4. Will submitting an enquiry with UK Business Loans affect my credit score?
No — completing our quick matching enquiry is not an application and will not affect your credit score; full lender credit checks may occur only later.

5. What documents and information do lenders and brokers typically require for vehicle finance?
Lenders usually request ID, company registration, three months’ business bank statements, recent accounts or management accounts, VAT details (if applicable), vehicle specifications and director information.

6. Can start‑ups or businesses with poor credit obtain business vehicle finance?
Yes — our network includes brokers and lenders who specialise in start‑ups and imperfect credit profiles, though they may require higher deposits or different security.

7. Can I use a part‑exchange or trade‑in as my deposit?
Yes — most vehicle finance providers accept part‑exchange/trade‑in value to reduce the cash deposit, subject to valuation and lender terms.

8. How quickly can I get tailored vehicle finance quotes through UK Business Loans?
You can often receive an initial response within hours and full lender quotes within one to two working days once paperwork is provided.

9. What additional costs should I consider besides the deposit on business vehicle finance?
Account for interest and total finance cost, maintenance and servicing, insurance, VAT treatment, excess mileage/damage charges (BCH) and any early‑termination or balloon payment fees.

10. How can I reduce or avoid paying a large cash deposit for fleet or van finance?
Consider brokered zero‑deposit offers, part‑exchange, negotiating BCH initial rental, accepting longer terms or higher monthly payments, and improving your business credit and documentation.