Financing an HGV in the UK is closely tied to the operator licensing system. Lenders want to know you can legally drive the lorry, that your business can legally operate it, and that it earns enough to cover the payments. This guide covers each of those, the main finance types, how VAT works, and every document you’ll need.
Licences you need first
| Licence or card | Covers | Notes |
|---|---|---|
| Category C1 | Vehicles 3.5–7.5 tonnes | Medium-sized lorries |
| Category C | Rigid lorries over 3.5 tonnes | Needed before C+E |
| Category C+E | Articulated lorries and drawbar combinations | The licence for tractor units |
| Driver CPC qualification card (DQC) | Professional driving | 35 hours of periodic training every 5 years |
| Digital tachograph driver card | Records driving and rest times | Issued by the DVLA, valid 5 years |
The O-licence and financial standing
You need a goods vehicle operator’s licence from the Traffic Commissioner to use vehicles over 3.5 tonnes for business. A standard national licence lets you carry other people’s goods for hire or reward in Great Britain; standard international adds journeys abroad; a restricted licence is only for carrying your own goods. Standard licences need a transport manager who holds a Transport Manager CPC.
To get and keep the licence you must show financial standing: money that is available to the business at all times. It isn’t a fee.
| Licence type | First HGV | Each additional HGV |
|---|---|---|
| Standard (national or international) | £8,000 | £4,500 |
| Restricted | £3,100 | £1,700 |
Accepted evidence includes bank or building society statements, a written confirmation of an overdraft or credit facility, invoice finance agreements and audited accounts. For a limited company the money must be in the company’s account, not a director’s.
Lenders usually won’t release funds until the O-licence is granted, or at least applied for with a reference number, so apply early. Many start-up hauliers line up finance and the O-licence at the same time.
Step by step: getting HGV finance
- Pass your C or C+E test and get your DQC and tachograph card.
- Set up the business (sole trader, partnership or limited company) and open a business bank account.
- Arrange an operating centre and maintenance contract, then apply for the O-licence.
- Choose a truck and get a written quote.
- Apply through a broker or lender with the documents below. Expect a credit search on the business and on each director or partner.
- Pay the deposit (and usually the VAT), arrange insurance with the lender’s interest noted, sign and collect.
The complete documents checklist
About you (sole trader, each partner or director)
- Photo ID: passport or photocard driving licence
- Proof of address within the last 3 months (utility bill, council tax bill or bank statement)
- Three years of address history
- Driving licence with category C1, C or C+E, plus your DVLA check code if asked
- Driver CPC qualification card and digital tachograph driver card
- Signed consent for a credit search
- Personal guarantee for start-ups and many limited companies
- Details of your home (owner or tenant): homeowners often get better terms
About the business
- Companies House registration number (limited companies) or partnership agreement
- Operator’s licence number, or the O-licence application and reference
- Transport manager details and their Transport Manager CPC certificate (standard licences)
- Operating centre address with a lease, ownership papers or written permission to use it
- Maintenance contract or arrangements for safety inspections
- VAT registration certificate and your last four VAT returns
- Business bank details for the direct debit
Income and accounts
- 3–6 months of business bank statements (all pages)
- Two years of filed accounts (limited companies) or SA302 tax calculations with tax year overviews (sole traders and partners)
- Management accounts if your last year-end is over 9 months ago
- Schedule of existing finance agreements
- Customer contracts, haulage agreements or letters of intent
- Business plan and 12-month cash-flow forecast for start-ups
About the truck
- Dealer quote or invoice: make, model, registration, VIN/chassis number, mileage and price
- For private or auction sales: the V5C logbook, seller’s details and an HPI or outstanding finance check
- MOT (annual test) certificate for a used HGV
- Proof of deposit and VAT funds
- Part-exchange details and settlement figure on any existing finance
- Commercial vehicle insurance with the lender’s interest noted
Hire purchase, lease purchase or lease?
| Finance type | Who owns it | VAT | Good for |
|---|---|---|---|
| Hire purchase | You, after the last payment (and option-to-purchase fee) | Paid upfront, reclaimable | Owning outright; capital allowances |
| Lease purchase | You, after the balloon | Paid upfront | Lower payments with a final balloon |
| Finance lease | The lender; you get a share of sale proceeds | Added to each rental | Cash flow; VAT spread out |
| Contract hire | The lender; you hand it back | Added to each rental | Fixed costs, often with maintenance |
| Asset refinance | You (after release of equity) | — | Raising cash against trucks you own |
Worked example: a £95,000 tractor unit
| Hire purchase, 60 months | Lease purchase, 48 months + 30% balloon | |
|---|---|---|
| Price (ex VAT) | £95,000 | £95,000 |
| Deposit | £10,000 | £10,000 |
| Rate | 9.9% | 9.9% |
| Monthly payment | £1,801.82 | £1,665.40 |
| Final balloon | — | £28,500 |
| Total interest | £23,109 | £23,439 |
At 8,000 km a month, the hire purchase costs about £0.23 per kilometre in finance alone. Run your own figures.
VAT and tax
On hire purchase, VAT on the truck is normally paid upfront with the deposit; some lenders offer a VAT deferral of a few months. A VAT-registered haulier reclaims it on the next VAT return. On leases and contract hire, VAT is charged on each rental instead. Trucks bought on HP qualify for capital allowances: the Annual Investment Allowance covers up to £1 million a year of qualifying spending, and companies can use full expensing for new and unused trucks. Agreements of £25,000 or less with a sole trader or a partnership of two or three partners can fall under the Consumer Credit Act, which gives extra protections.
Frequently asked questions
Can I get truck finance before my O-licence is granted?
Some lenders give approval in principle, but most only pay out once the licence is granted or the application is in with a reference number.
How much deposit do I need for HGV finance?
Typically 10% or more plus the VAT. Start-ups and poor credit often need 20–30%.
Can I use the truck’s finance as financial standing?
No. Financial standing must be available money such as cash or an overdraft facility; the loan to buy the truck doesn’t count.
Can I finance a used HGV?
Yes. Lenders usually set a maximum age at the end of the term, often 10–12 years, and want an HPI check and current MOT.
