Vehicle refinance release cash from your fleet

What is vehicle refinance?

Vehicle refinance lets your business raise a lump sum against commercial vehicles it already has, then repay it monthly while you carry on using them. If a vehicle still has finance on it, the new lender typically settles that agreement and advances the remaining equity to you.

Fleets tie up a lot of capital. A haulier with a few tractor units and trailers, or a trades business with a yard full of vans, can be sitting on six figures of value that does nothing for cash flow. When a bank says no to an unsecured loan, or the amount on offer isn't enough, the vehicles themselves can be the answer, because the lender's decision rests largely on what they are worth and how easily they could be resold.

The British Business Bank explains that you don't need to own 100% of an asset to refinance it: the lender looks at your equity, which is the value minus anything still owed, along with the asset's type, age and condition. That means part-paid vans on hire purchase can often be included alongside vehicles you own outright, and several agreements can be brought together into one.

We are a credit broker, not a lender. We look at your fleet list, any outstanding settlements and what the money is for, then approach lenders on our panel who are comfortable with commercial vehicles of that age and type. For general background, see our asset refinance page; if you're buying rather than releasing cash, see van finance or HGV and truck finance.

Key features

What businesses use it for

• Working capital during a slow spell or late-paying customers
• Funding the upfront costs of a new contract
• Clearing several vehicle HP agreements into one
• Deposits on additional or newer vehicles
• Paying a VAT or tax bill without selling vehicles
• Replacing short-term borrowing with a longer term

Vehicle refinance vs selling vehicles vs an unsecured loan

Proving ownership: why the V5C isn't enough

Lenders need to know exactly what they are lending against. The V5C logbook records the registered keeper, but GOV.UK guidance points out that the registered keeper is not necessarily the owner, and that lenders on hire purchase can keep ownership rights over a vehicle even though your business is named on the logbook. A finance search can show whether any agreement is still registered against a vehicle.

To keep things moving, have a fleet list ready with registrations, VINs, mileage and condition notes, plus purchase invoices for vehicles you own outright and current settlement figures for anything still on finance. Clear records are often the difference between a quick decision and weeks of back and forth.

• Fleet list with registration, make, model, year and mileage
• Purchase invoices or proof of outright ownership
• Settlement letters for any existing finance
• Service history and MOT status
• Recent business bank statements

How age and mileage affect what you can raise

Commercial vehicles lose value as they age and rack up miles, so lenders usually advance a proportion of today's value rather than the full figure, and they match the term to the vehicle's remaining working life. A two-year-old van might be refinanced over several years, while an older tractor unit may only support a short term or a smaller advance. Specialist bodies, such as refrigerated units or tippers, are valued on their own resale market, which can help or hinder.

If you've claimed capital allowances on the vehicles, some refinance structures, particularly sale and leaseback, involve selling them to the lender, which may lead to a balancing charge under HMRC rules. Please speak to your accountant before you choose a structure.

What lenders typically look at

• A trading business, typically with a track record lenders can review
• Commercial vehicles with clear value and a resale market
• Evidence of ownership or settlement figures for existing finance
• Business bank statements, typically the last three to six months
• Accounts or management figures for larger facilities
• Identity and address details for owners or directors