Can I Lease A Van With Bad Credit?

While it may be more difficult to lease a van with bad credit history, it can be still possible to do so. As with any other form of credit, leasing a van requires you to undergo financial checks to verify that you are able to comfortably afford the monthly payments.

If you are a sole trader or your business has a bad credit history, you may be required to provide further documentation to support your application in order for it to be approved, such as recent bank statements or company accounts.

Not every business has good credit, which can affect their chances of securing a van lease. Some businesses are more aware than others about the state of their credit rating, while it may come as a surprise to some. This raises the question of whether a business can lease a van with bad credit. To find out the answer to that and much more, read on below to discover everything you need to know.

How will my credit history affect my ability to lease a van?

When you apply to lease a van, you are asking to ‘rent’ a brand new vehicle that could cost over £20,000 on today’s market. In return, you will be required to pay a monthly payment that is not equal to the full market price. This means that the finance company is taking the larger risk involved with the deal, so they need to verify you have a secure enough financial background before releasing the vehicle.

Banks and other lenders providing credit to their customers carry out credit checks. Our funding panel also follows a similar process to assess the individual’s or company’s credit history. The credit score provided by the credit agency will look back across the past six years to review financial transactions related to any credit requests.

Although the parameters used by each finance company is different, in general terms they are looking for a high credit score. This helps to assure us that you are able to maintain other commitments without struggling to make the monthly lease payments.

One of the three main credit referencing agencies in the UK will likely be used to assess your credit file: Equifax, Experian or TransUnion.

Eligibility criteria for business van leasing

In order to be eligible for business van leasing your company needs to fall into the following category:

  • Limited Company
  • Sole-trader
  • PLC
  • Partnership
  • Limited Liability Partnership
  • Charity
  • Embassy

Businesses that are under 12 months old may be required to submit 3-6 months of business statements, a director’s guarantee (only applicable to limited companies), an opening balance of the business account, and if available, management accounts to support the application. Before applying for a business van lease with bad credit history or a poor credit score, ensure you can access this information, as it will allow you to receive a quicker decision.

How to improve my credit score?

If you know, or suspect, you have bad credit history, it makes sense to take some time to improve your rating where possible. Even if you decide not to apply for a business van lease, it pays to improve your rating as this will help support your business in the long run.

Request a free credit report

You can ask for a free copy of your credit report at any time from companies such as Experian, Equifax or TransUnion. This will show some of the same information that is used to reach a decision about your business van lease application. If you notice any discrepancies, get in contact with the credit agency to have these changed as it could make all the difference.

Stay in the black

Having a healthy current account that stays in the black will also help your credit score. Avoid going into your overdraft and close down any old bank accounts that are no longer being used.

Pay bills on time

Even the non-payment of bills can have a detrimental effect on your credit rating. The easiest way to avoid this is to ensure you set up Direct Debits on each one so they are paid automatically and you are not charged for forgetting to pay on time.

One loan at a time

Running a business can require you to secure several lines of credit at once. However, the risk you pose to lenders increases significantly if you have multiple loans at the same time. The way to avoid this is to take out one at a time and ensure this is paid back without any issues. It will improve your credit score by illustrating you are reliable and trustworthy when it comes to receiving credit.

If you’re looking for more tips on van leasing, head over to the rest of our handy guides and discover everything you need to know. Or if have additional questions, just contact our experienced team for some helpful and friendly advice.