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Loans for Haulage and HGV UK Guide: Essential Financing Tips

The haulage and Heavy Goods Vehicle (HGV) industry plays a crucial role in the UK’s economy, moving millions of items every day and ensuring the efficient functioning of numerous sectors. As a haulage business owner or operator in the UK, you might be considering taking out a loan for the purchase, maintenance, or expansion of your HGV fleet. Understanding the various types of finance options available and their implications is essential to make informed decisions that will benefit your business.

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HGVs are essentially large trucks or lorries with a gross vehicle weight ranging between 3.5 and 44 tonnes, designed to transport heavy goods. Financing your HGV fleet can be a daunting task, given the range of finance options, various factors affecting loan eligibility, and the diverse requirements of haulage companies. This comprehensive guide aims to provide you with vital information that will assist you in navigating the complexities of HGV financing in the UK.

Key Takeaways

  • Assess different finance options, including hire purchase and leasing, to find the best fit for your haulage business.
  • Manage your fleet and assets efficiently while considering insurance, maintenance, and cash flow implications.
  • Your credit score and loan eligibility play a crucial role in securing the right financing for your HGVs.

Understanding HGV and Loan Basics

When you’re in the haulage industry, purchasing heavy goods vehicles (HGVs) is essential for growing your business. HGVs are large trucks or articulated lorries with a gross vehicle weight of between 3.5 and 44 tonnes1. As a small business owner, securing loans for the purchase of such vehicles can offer numerous benefits, including increasing your fleet size, improving cash flow, and upgrading older vehicles2.

To better understand the options available to you when seeking HGV loans, it’s crucial to be aware of the various types of financing solutions on the market. These can include hire purchase agreements, leasing, asset finance, and even unsecured business loans3. Each option has its own set of advantages and disadvantages depending on your specific needs and financial situation.

Hire purchase agreements require you to make monthly payments over a predetermined period until you eventually own the vehicle outright4. This may be a suitable choice if you want to retain the value of your investment long term.

Leasing, on the other hand, allows you to rent an HGV for a fixed period, and at the end of the lease, you may choose to purchase the vehicle or return it5. This option offers lower upfront costs and gives you the flexibility to upgrade or switch vehicles easily.

Asset finance is another option that enables you to use the value of an existing asset, such as a truck or other equipment, to secure a loan6. This can be especially advantageous if you have valuable assets but limited cash flow.

It’s also possible to pursue unsecured business loans, which don’t require you to provide collateral. Although this may be a more accessible option, it typically has higher interest rates and shorter repayment terms7.

As a small business owner, it’s important to carefully assess your specific needs and long-term goals when choosing the right type of loan for your HGV purchase. By doing thorough research and evaluating the various financing options, you’ll be better equipped to make an informed decision that can support the growth and success of your haulage business.

Types of Finance Options for Haulage

When it comes to financing your haulage business, there are several options available. Knowing the different finance options can help you make informed decisions that suit your business needs. Here, we will discuss some of the major financial solutions tailored to the haulage industry.

Asset Finance is a popular option, as it allows you to purchase heavy goods vehicles, trailers, loaders, and other haulage equipment without draining your cashflow. Unlike buying vehicles outright, asset finance involves leasing the equipment for a set period with an option to purchase at the end of the lease term.

Hire Purchase is another finance option, where you can spread the cost of purchasing vehicles and equipment across a series of monthly instalments. This allows you to acquire the assets you need without having to make a large upfront payment. It’s important to note that you’ll need to apply for hire purchase through a finance provider which specialises in commercial vehicle finance. Our brokers can help you finding the most suitable lender for your needs.

Finance Lease is a flexible funding solution that lets you lease vehicles or equipment for a set period, with the option to purchase them at the end of the lease term or return them. Finance leases often come with lower monthly instalments compared to hire purchase and typically have no upfront cost. This type of lease is particularly beneficial for businesses that want to conserve cash and fund their fleet from operating income.

Operating Lease is similar to a finance lease, but with a key difference being that at the end of the lease term, you can return the assets without having to purchase them. This option benefits businesses that want to continually upgrade their equipment or vehicles. Some Banks are a specialist commercial vehicle finance provider that offers operating lease options.

To apply for these finance solutions, you will need to approach a suitable finance provider. and submit your application. They will review it and provide you with a decision based on your eligibility and business requirements. The application process for these loans may vary depending on the provider, so make sure to check their specific requirements and offerings before applying.

Guide to Financing HGVs

When it comes to financing heavy goods vehicles (HGVs) for your business, there are several options available to ensure you get the right solution for your needs. The process of acquiring finance for HGVs can be quite different from securing a loan for a car or van, so it’s crucial to know the ins and outs of securing funding for these larger vehicles.

One of the most common options for financing an HGV is through a hire purchase agreement. In this arrangement, you can pay for the vehicle in monthly instalments, typically over a period of up to five years. At the end of the term, you’ll have the option to fully own the HGV by paying a final balloon payment. This option provides you with the flexibility to spread the cost of the new truck or trailer over time, making it more manageable for your business.

Another financing alternative is leasing, which can be less risky compared to a hire purchase agreement. When you lease an HGV, you’re essentially renting the vehicle for a fixed period, usually between three and five years. During this time, you’ll make monthly payments to the leasing company, and once the term is over, you can return the HGV, extend the lease, or in some cases, purchase the vehicle at a pre-agreed price. Leasing can be advantageous for businesses that require new equipment frequently, as it enables you to upgrade to the latest models easily.

You may also consider asset finance as an option for funding your HGVs. Asset finance helps businesses obtain the necessary vehicles and equipment by using the assets themselves as collateral. This means that the lender retains ownership of the assets until the loan has been repaid in full. This type of financing can be beneficial for businesses with limited cash flow or credit history, as it often comes with more favourable terms and lower interest rates.

Finally, if you’re looking to purchase a used HGV, you may be able to secure a loan through a specialised vehicle finance provider. These lenders are familiar with the unique requirements of HGV ownership and can offer tailored solutions to help you acquire the right truck or trailer for your business. We can find you the right HGV finance lender who are able to lend up to £500,000 for the purchase of HGVs, lorries, and trailers.

In conclusion, when looking for finance options for an HGV, the key is to shop around and compare the various solutions available to you. This way, you can find the best financing option that suits your specific needs and budget, keeping your haulage business running smoothly and efficiently.

Dealing with Haulage and HGV Companies

When working with haulage and HGV companies, it’s essential to be aware of the financial aspects, such as obtaining loans and understanding the different types of funding available. You may find yourself in need of extra financing, perhaps to expand your fleet, purchase new vehicles, or maintain existing assets. In this section, we’ll explore various loan and financing options to help maximise your success in this competitive industry.

The first type of funding available is asset finance. This option allows you to spread the cost of acquiring a new vehicle or equipment over a fixed term, resulting in manageable monthly payments. This can be a particularly useful solution for your haulage company when cash flow is tight or you wish to expand your fleet without overextending your resources.

Another financial option to consider is HGV finance, offered by specialist funding providers. This service focuses on helping businesses in the haulage industry access tailored funding solutions, regardless of their credit rating. With more than 20 years of experience, providers like these can guide you through the process of securing finance suited to your individual needs.

Keep in mind the changing tax rules for self-employed drivers, which might impact how you work with them. As of 6 April, new IR35 rules state that large and medium-sized haulage companies with net turnovers above £10m or employing 50 or more staff can no longer hire drivers working as limited companies. Instead, these drivers must be employed as PAYE workers – either directly by the haulage company, through an agency, or via an umbrella company. Please contact your accountant for the most up to date information on this.

Finally, it’s worth exploring various resources for funding and support in the haulage sector in the UK. This guide outlines how to access assistance for employing HGV drivers, ensuring that your company is well-equipped to meet the demands of this dynamic industry.

Remember, when dealing with haulage and HGV companies, being well-informed about financing options and taxation changes will help you navigate this competitive landscape more effectively. By staying up-to-date with industry developments and exploring various funding sources, you can drive your haulage business towards success and sustainability.

Lease and Hire Purchase Options

When looking into finance options for haulage and HGV businesses in the UK, two of the main options available are lease and hire purchase. Each option has its benefits and drawbacks, so understanding them is crucial for making the right decision that suits your business needs.

Lease

A lease is a flexible finance solution where you pay a fixed monthly fee to use a truck or HGV without owning it. This option enables you to keep up with the latest vehicles and technology, as you can regularly upgrade the truck or HGV at the end of the term. Leasing arrangements, such as sale and leaseback, even offer the possibility to own the asset after the term. With a lease, you can avoid the depreciation costs associated with owning a vehicle, and you can generally claim back the VAT on the lease payments.

Hire Purchase

Hire purchase is another finance option where you pay regular instalments for the truck or HGV and ultimately own it at the end of the agreement. This option offers more tax relief up front through the super-deduction (available on purchases until 31 March 2023), which provides up to 130% relief on the cost. Owning the vehicle also means you can afford to invest in customisation or upgrades that suit your specific business requirements. However, the responsibility of maintenance and depreciation falls on you, the owner.

Lease Purchase

A lease purchase is a hybrid between leasing and hire purchase. Like a lease, you pay fixed monthly instalments but have the option to purchase the vehicle after the agreement. This arrangement provides flexibility, allowing you to decide later whether you want to own the truck or HGV. However, the interest rates can be higher, and you need to ensure you can afford the balloon payment if you decide to keep the vehicle.

Contract Hire

With contract hire, you lease the truck or HGV for a fixed period while also benefiting from additional services such as maintenance, repairs, and breakdown assistance—all included in your monthly fee. This option is ideal for businesses that need a hassle-free way of managing their fleet and avoiding unexpected costs. However, there are restrictions on mileage and vehicle usage, which you need to consider when choosing this finance solution.

To determine the best finance option for your haulage or HGV business, carefully evaluate your needs, financial situation, and future goals. Each option presents advantages and disadvantages, so make sure to choose the one that best aligns with your business strategy and resources.

Insurance and Maintenance

Caring for your HGV and ensuring proper insurance coverage are essential aspects of running a successful haulage business in the UK. Fortunately, there are many solutions available to help you navigate these important areas.

Firstly, let’s look at insurance. It’s crucial to have the right truck and HGV insurance in place to protect your business and vehicles. There are various types of policies available, depending on your specific needs. Generally, they can include coverages for damages or loss, public and employer liabilities, and goods in transit protection. Make sure to research the options and select an insurance that meets the requirements of your business.

Additionally, consider freight and haulage insurance for greater peace of mind when transporting goods. This insurance can be added to your consignment costs to cover undesirable events that may occur during transit. Freight and haulage insurance can help protect you and your clients, ensuring smooth business operations.

Now, let’s discuss maintenance. Regular and thorough maintenance of your HGV is crucial to keep it in excellent condition. In the UK, commercial vehicle safety and maintenance guidelines are available on the GOV.UK website. These guidelines provide valuable information on topics such as tyre defects, wheel maintenance, and electronic braking performance. By following these guidelines, you can help minimise the risk of accidents and costly repairs.

In summary, having comprehensive insurance coverage and adhering to maintenance guidelines will provide a solid foundation for the success of your haulage and HGV business in the UK. By being proactive in these areas, you invest not only in your business’s future but also in the continued safety and satisfaction of your clients.

Managing Fleet and Assets

As a business owner, managing your fleet and assets can directly impact your profitability and reputation. It is essential to select the right financing option that suits your specific needs to ensure efficient operations and optimum cash flow management.

One option for managing your haulage and HGV assets is asset finance. This form of lease allows you to purchase heavy goods vehicles, trailers, loaders, and other types of haulage equipment without causing strain on your cash flow. By opting for haulage finance, you can speed up the process of expanding your fleet while keeping your financial health in check.

A flexible commercial vehicle finance solution is another way to acquire and manage your fleet of HGVs, haulage trucks, recovery vehicles, and commercial vans. This approach enables you to find the most fitting finance option for your business, tailoring it to your specific requirements. For example, Paragon Bank offers a variety of financing options that cater to different vehicle needs, ensuring you make the right choice for your company.

If you want to focus more on your core operations, consider outsourcing fleet management to experts that can help optimize your profit and loss, balance sheet, cash flow and tax management. is an example of a company that provides a range of fleet management and asset financing services, helping you choose the best option for your business.

Lastly, commercial vehicle leasing is another viable option for managing your fleet. Some bank vehicle solutions offers various leasing and funding options, from Sale and Leaseback to Business Contract Hire, designed to meet your business needs. This enables you to efficiently manage your commercial fleet, including workplace and depot charging, as well as long-term cost savings.

When managing your fleet and assets, it is crucial to explore different options and evaluate their suitability for your business. By carefully selecting the most appropriate financing and management solution, you can easily maintain a well-functioning fleet, contributing to the overall success and growth of your haulage or HGV business.

Cash Flow and Refinancing

Managing your cash flow is essential when running a haulage or HGV business. One aspect to consider is the timing of the VAT payment for your lorry, as it can impact your cash flow. Both purchasing a lorry outright and buying via a hire purchase will trigger the entire VAT amount on day one. Although much of this can be reclaimed, there might be a timing delay, and if cash management is a concern, it could influence your decision on which financing option to choose.

Refinancing can be a way to either restructure your existing HGV finance or release cash from a vehicle you already own. It is a form of asset-backed lending, which means the amount you can borrow is related to the value of the truck or HGV it is based on1. If your business has been successful, you may find that your vehicle’s value has increased, allowing you to borrow more funds to invest in your business growth. This increased borrowing power can be especially useful for expanding your fleet or covering unexpected expenses.

When looking into refinancing options, do thorough research to find the most competitive deal. There are numerous lenders who can help finance your haulage business, but securing the right one is crucial for minimising interest rates and financial risk2. Collaborate with financial experts who have experience in the haulage sector, as they can guide you towards the funds that best suit your needs.

In conclusion, maintaining optimal cash flow is at the core of a successful haulage and HGV business. Assess your financial position by comparing VAT payments for different finance methods and explore refinancing options to release cash from your existing assets. Seek assistance from industry experts to help navigate the best options for your business growth and financial stability.

Credit Score and Loan Eligibility

In the UK, your credit score plays a crucial role in determining your eligibility for various types of loans, including haulage and HGV loans. A good credit score increases your chances of securing a loan, whereas a poor credit score may make it challenging to obtain the necessary financing.

Before applying for a loan, it’s essential to check your credit score to see where you stand. Several factors contribute to your credit score, such as your payment history, outstanding debts, and credit utilisation ratio. By maintaining a healthy credit score, you can increase your likelihood of approval for haulage and HGV loans.

Different lenders have distinct requirements and eligibility criteria for each loan type. Therefore, it’s essential to understand specific loan eligibility requirements before starting the application process. Always plan your repayments, and ensure that you meet the financial stability criteria required by the lender. You can utilise tools such as loan eligibility calculators available online to estimate your chances of securing a loan.

When it comes to haulage and HGV loans, there are multiple funding options available, including asset finance and loans for varying business types (sole operators, limited companies, partnerships, franchises, and private individuals). Make sure to research different types of financing, and select the one best suited to your business requirements and financial stability.

In summary, keeping track of your credit score and understanding loan eligibility are crucial aspects of applying for haulage and HGV loans in the UK. By maintaining a healthy credit profile and meeting the necessary criteria, you can boost your chances of securing the financing needed for your haulage business.

Conclusion

In the UK, the haulage and HGV industry plays a crucial role in transporting goods across the country. As a business owner in this sector, securing the right financing options can be a significant factor in the success of your operation.

You can explore various lending options, such as government funding for a Trucking / Haulage Business, or consulting with financial institutions that specialise in financing heavy goods vehicles and haulage equipment.

When assessing your financing options, consider factors such as interest rates, repayment terms, and the total cost of the financial agreement. It is essential to seek expert advice and analyse your business’s cash flow projections while evaluating these factors, helping you make an informed decision.

In summary, researching and selecting the appropriate funding for your UK haulage and HGV business is imperative for a smooth and successful business operation. Keep a confident approach, stay knowledgeable, maintain neutrality, and maintain clarity in your decisions to reach the best outcome for your business in the long run.

Frequently Asked Questions

How does financing for HGV training work?

Financing for HGV training can vary depending on the provider, but typically, you can apply for a loan or financing package that covers the cost of your training. You may also be eligible for government funding schemes to help cover the costs of setting up your business and HGV training. Be sure to research financing options available in your area and choose the ideal one for your needs.

What are the costs involved in starting a haulage company in the UK?

Starting a haulage company in the UK involves several costs, such as purchasing vehicles, insurance, fuel, and maintenance. Additionally, you need to consider the cost of obtaining licences, setting up an office, and employing staff. While prices can vary, a useful resource on finding funding for new HGV drivers can help you understand the expenses involved.

Is the haulage industry profitable?

The profitability of the haulage industry depends on factors such as the efficiency of your operation, the types of vehicles you operate, and the volume of business available. While the industry faces challenges such as fluctuating fuel prices and increasing regulations, a well-run haulage business can be profitable if managed effectively.

Can I purchase a truck using finance?

Yes, purchasing a truck using finance is possible. Haulage finance options like asset finance and lease purchase allow you to buy or lease heavy goods vehicles and other types of haulage equipment without impacting your cash flow significantly.

What are some common finance deals for used pickup trucks?

Common finance deals for used pickup trucks include hire purchase (HP), lease purchase, finance lease, and personal contract purchase (PCP). These options allow you to spread the cost of a used pickup truck over a set period, usually with a deposit and monthly payments. It’s essential to understand the terms of your truck finance agreement and choose the right option for your business.

Are there finance options available for HGV training near me?

There are likely finance options for HGV training available near you. Some training providers offer payment plans or financing packages, while others may have partnerships with banks or lenders for suggested financing options. Additionally, you can explore government funding schemes to see if you qualify for support in HGV training costs. Research the options available in your region and compare them to find the most suitable one for your needs.

 

Footnotes

  1. https://commercialmortgagebroker.uk/business-loans/↩

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