Making the Switch Without Breaking the Bank
Switching to an electric van has never been more tempting for UK tradesmen. Lower running costs, zero emissions, and the ability to enter Ultra Low Emission Zones (ULEZ) for free are all strong incentives.
But one question often comes up first: “How am I going to pay for it?”
The good news is there are multiple financing options designed to make owning or leasing an electric van straightforward and affordable. Whether you’re a self-employed tradesman or running a small fleet, the right finance package can make going electric a smart business move.
Option 1: Outright Purchase
Buying a van outright means you own it from day one. Advantages include:
No monthly payments once purchased
You can modify or brand it as you wish
Full control over resale when it’s time to upgrade
For some businesses, especially those with available capital or access to business loans, outright purchase can make sense. You also benefit from capital allowances, meaning you can write down the cost of the van against your taxable profits.
However, the higher upfront cost can make this option less appealing for small businesses trying to preserve cash flow.
Option 2: Hire Purchase (HP)
Hire Purchase spreads the cost over a set period (usually 2–5 years). You pay an initial deposit, then fixed monthly payments until the final “balloon” payment, after which you own the van.
Benefits for tradesmen include:
Predictable monthly payments
Ownership at the end of the term
Potential to reclaim VAT on monthly payments if VAT-registered
HP agreements are popular with small businesses because they combine the benefits of eventual ownership with manageable payments.
Option 3: Leasing (Contract Hire)
Leasing allows you to drive a new electric van without owning it. You pay a monthly fee for a fixed term, then return the van at the end.
Advantages include:
Lower monthly payments compared to HP
No worries about resale value or depreciation
Option to upgrade to a newer model every few years
Leasing is ideal for tradesmen who want to keep their vehicles up to date with the latest technology — and avoid the hassle of selling an old van.
Option 4: Contract Purchase (PCP)
Personal Contract Purchase works similarly to leasing, but you have the option to buy the van at the end by paying a lump sum.
It offers:
Flexibility — buy, return, or upgrade at the end
Lower monthly payments compared to HP
Good for businesses unsure about long-term needs
For self-employed tradesmen, PCP can be a way to keep options open while still enjoying a new van.
Option 5: Business Loan
If you prefer to own your van but don’t have the capital upfront, a business loan can cover the cost.
Pros:
Flexible repayment terms
Ownership from day one
Ability to negotiate purchase price as a cash buyer
Cons:
Interest costs
Requires good credit history
Government Grants and Incentives
One of the biggest cost-savers is the Plug-in Van Grant (PiVG). This provides up to 35% off the purchase price, capped at £5,000 for small vans and £16,000 for large vans, depending on the model.
To qualify:
The van must meet certain emissions and weight criteria
The grant is applied directly at the point of purchase
You must be buying from an eligible manufacturer
For many tradesmen, the PiVG can make an electric van’s upfront cost comparable to diesel.
Tax Benefits for Electric Vans
Electric vans are also exempt from:
Vehicle Excise Duty (road tax)
ULEZ and Clean Air Zone charges
Benefit-in-Kind tax for zero-emission company vans (currently 0%)
These savings can add up to thousands of pounds per year — effectively lowering your “real” cost of ownership.
Operating Lease vs Finance Lease for Fleets
If you run multiple vans, you may want to look at:
Operating Lease — Lower payments, no ownership, often includes maintenance packages.
Finance Lease — Slightly higher payments, but you keep the van at the end (or sell it and share profits with the finance company).
This can be particularly cost-effective for small courier companies or trades businesses running 2–10 vans.
Managing Cash Flow with Finance Options
For many small businesses, the appeal of leasing or HP isn’t just affordability — it’s cash flow management. By avoiding a large upfront purchase, you keep capital free for:
Hiring staff
Buying tools or equipment
Marketing your services
This flexibility can be the difference between expanding your business and standing still.
Residual Value and Depreciation
Diesel vans typically lose value quickly, especially with the rise of ULEZ zones. Electric vans are holding their value better, partly because demand is growing and supply is limited.
Choosing a finance option that shields you from depreciation risk — like leasing — can make financial sense if you don’t plan to keep the van long-term.
Real-World Example: Self-Employed Electrician
Let’s take “Mark”, a self-employed electrician in Bristol:
He leased a Farizon SV under a 3-year contract hire agreement
Monthly payments: £350 + VAT
Charging at home on an off-peak tariff
Savings: £2,500/year compared to his old diesel (fuel, maintenance, ULEZ)
By using leasing, Mark avoided a large upfront cost and switched to electric without affecting his working capital.
Tips for Getting the Best Finance Deal
Shop around — compare at least three finance providers.
Negotiate — some dealers will lower monthly payments to secure the sale.
Check grant eligibility — not all vans qualify for the PiVG.
Consider maintenance packages — fixed-cost servicing can simplify budgeting.
Conclusion: Financing Makes Electric Vans Accessible Now
The cost of going electric is no longer the barrier it once was. With grants, leasing, hire purchase, and other finance options available, UK tradesmen can now make the switch without straining cash flow — and start reaping the benefits of lower running costs immediately.
Whether you want ownership from day one or the flexibility to upgrade every few years, there’s a finance option to suit your business.
If you’re ready to explore how an electric van could work for you, book a 24-hour test drive and see the benefits for yourself.
Aug 10, 2025
