Roland Dickinson had just got out of prison in July 2021 when he carried out some work for the victim, and expected to be paid for the job straight away.
Newcastle Crown Court heard that when the money was not handed over immediately, the 46-year-old cycled to where the victim's Fiat van was parked and set it on fire.
CCTV footage of the arson attack shows Dickinson, who had been drinking, calmly pouring liquid from a petrol can over a number of parked vehicles at an industrial estate in Ashington before setting one alight.
He then peddled off and told a passer-by, who saw what Dickinson had done: "Phone the police, do what you want".
The court heard Dickinson, who was jailed for firearms offences in 2011, had just got out of jail for damaging three cars in a previous grudge attack.
Prosecutor Neil Pallister told the court the van fire on July 25 last year was a "revenge attack using accelerant" and added: "The defendant had done some work for the complainant on July 23 and had wanted payment for the work straight away, which the complainant wasn't in a position to comply with."
Dickinson, of Third Row, Linton, Morpeth, admitted arson.
The court was told Dickinson had suffered from post-traumatic stress disorder after serving in the armed forces in the past.
Shaun Routledge, mitigating, told the judge: "It was a reckless and stupid, spur-of-the-moment attack."
The court heard Dickinson has claimed he "wanted to be a lifer and would kill someone" and has been assessed as a "very dangerous man, capable of acting out threats."
The probation service had assessed him as a "risk to life".
Judge Julie Clemitson sentenced him to two years behind bars, with an extended five-year licence period.
In delivering sentence, the judge told him: "You had done some work a few days before and you were unhappy he hadn't paid you immediately and therefore took your revenge out on his vehicle."