Asset Finance for Commercial Vehicles in the UK
Get in touchHaving the right vehicles that suit your business's requirements while maintaining cash flow is paramount in today's business world.
That is why it is good to have an asset finance solution that works with your business.
Whether you are thinking about upgrading or expanding your existing fleet of heavy commercial vehicles, cars or trailers, our in-house finance specialists are here to help you.
Asset finance services are fast becoming the number 1 choice for businesses across the UK.
Using your existing assets to lend money against the purchase of new vehicles makes it easier to buy.
Why not take advantage to invest in your business?
We will talk about the branches of commercial vehicle finance and how they can work with your business.
We will also discuss the various commercial classes of motor vehicles, electric vehicles included, along with various finance options to suit your business's cash flow needs best.
Call us to find out how we can help your business's cash reserves.
What is Asset Finance for a Commercial Vehicle?
Through asset finance, a company uses an existing asset as collateral to acquire funds against the value of the said asset.
It's taking out a loan against an asset already owned to acquire the finances to purchase a new vehicle or equipment.
Instead of paying a lump sum upfront, commercial vehicle finance allows your company to pay smaller amounts over a specified period of time.
Using your already owned business assets, your business can use them as collateral for purchasing additional assets, helping to grow your business.
This way, you can support the cash flow pressure on your company.
How Does Fleet Vehicle Finance Work?
To fund a new fleet of cars or buses can be done in several ways: buy outright or through leasing options.
By leasing your fleet of electric buses, for example, you allow your business to use its capital for growth rather than for the outlay of a new fleet of cars or trucks.
Leasing implies that the fleet of vehicles is held as collateral. Leasing requires your company to put down less capital upfront and offers lower monthly repayments.
You also have more flexible terms allowing you to be more fluid when it comes to the business's cash flow.
Asset Finance Solutions for Commercial Vehicles in the UK
There are a few different ways your company can acquire commercial vehicle finance.
As a customer of lending institutions, the financial ombudsman service is readily available for you.
Let's discuss some of those options and costs available to customers right now.
Hire Purchase Agreement
With hire purchase agreements (HP), you can spread the cost of your new investment through fixed monthly payments between 12 to 60 months.
The deposit can range between 5% and 50% of the vehicle's price, the balance and the additional rate paid over the period.
Some of the benefits of a Hire Purchase include:
Tax benefits allow your business to claim the VAT back, offsetting your interest payments.
Capital grants and allowances may also be claimable.
A low deposit allows you to keep your working capital up.
Fixed monthly payments make cost budgeting easier.
The asset is yours after all payments.
Finance Lease
A finance lease is a funding option that may well suit your business requirements due to the tax advantages for companies.
Through an asset finance lease, the vehicle never becomes your property.
It remains the property of the lending team.
Similar to hire purchase, payments are made monthly, interest included.
Once the agreement has expired, you will not own the vehicle.
A new contract will be started if you wish to continue using the vehicle.
For all the benefits of funding through financial products and services, visit our website.
Our team of customer-oriented individuals can help you.
Contract Hire
With contract hire agreements, the vehicle is hired for a certain period of time, usually 12 to 60 months, and the rent is based on an agreed-upon mileage use of the vehicle.
Upon completion of the contract hire agreement, the vehicle is returned to the company providing the money, releasing your company from any depreciation risks and vehicle disposal finance complications.
Contract hire may also include full maintenance, including brakes and tyres.
Operating Lease for Commercial Vehicle
An operating lease is an option that is regularly chosen by companies wanting to use specialised equipment.
The asset is rented for a monthly fee with no intention of having ownership of the asset.
Cheaper than a finance lease option, the onus of maintenance of the equipment is usually the responsibility of the company renting the equipment from the lender.
Commercial Vehicle Finance Rates
The average rate to finance commercial equipment ranges from 2%-20%, dependent on the established deal you have with your services provider.
As the loan has been backed by an asset, your rates will be lower than most other forms of business funding.
For HP and lease rates, your company's credit score is considered and the type of item that you wish to purchase.
The better your company's credit score, the lower rates you pay.
Those with a poor credit score run the risk of paying a higher interest rate.
Benefits of Commercial Vehicle Financing
There is a range of benefits for asset financing for a commercial vehicle, as follows:
Your payment cost is fixed.
Low deposit means that you can use the vehicle with only a small outlay of your cash flow.
Receive between 18% to 40% of your total payments back.
Flexible payment structure.
Variable and fixed interest rate options.
VAT payable can be offset against your taxable profits.
What Vehicles are Classed as Commercial Vehicles in the UK?
To be classed as a commercial vehicle, the vehicle will usually need a payload of more than 1 tonne, weigh more than 3,5 tonnes and have a dedicated loading area larger than passenger space.
They are only used for business purposes such as commercial transportation, for example, coaches, trucks and trailers.
The most common commercial vehicles that are financed are:
Vans
HGVs (Heavy Goods Vehicles)
Buses and Coaches
FAQs
How Long Does it Take to Secure Vehicle Finance?
Depending on the status of your business and enquiry, to finance commercial vehicles can take hours or days.
If your business and its books are in good order, finance for your commercial vehicles can be completed in a matter of hours.
Vehicles in stock that need to be delivered can take between 10 - 14 days, while vehicles being ordered can take up to 3 or 4 weeks to approve funding.
Our team of experts can help you fund and secure your next team of vehicles.
Visit us here, or give us a call for customers support satisfaction.
What Type of Security do I Need for Vehicle Finance Lease?
For leasing options, a deposit is required upfront, and a monthly payment schedule is put in place for the deal.
The vehicle is then used to secure the financing, acting as security against the business's loan.
If a payment is missed, the vehicle may be repossessed. You may negotiate some leniency in these terms for support from your broker if possible.
Summary
There are a variety of ways you and your business can benefit from a team of financial experts that specialise in finance products that support your business.
No matter your needs, an electric car, hybrid vehicle or otherwise, as a customer, you have options available to your businesses.
Further information can be found by signing up to our mailing list below by completing the form, where you will find the perfect team to handle any queries you may have.