From cars to tractors to lorries, businesses in all sectors rely on vehicles to keep running. Vehicle finance lets you spread the cost of acquiring a vehicle, whether new, used or at auction, so you can make affordable monthly repayments rather than hand over a lump sum upfront.
How Does Vehicle Finance Work?
Here’s a quick overview:
If you need a vehicle for your business, you’ll find a broad spectrum of finance products from specialist, local and high street lenders. Here are just a few of the most common choices.
Business loans:
For a single, affordable vehicle purchase, a business loan may be a simple solution. If you can offer collateral to secure the loan, you’ll usually benefit from lower interest, a higher borrowing threshold and a longer repayment term. The lender can seize the asset if you fail to pay back the loan. Unsecured loans may require a personal guarantee.
Asset finance:
With asset finance, you can opt for a hire purchase, finance lease or contract lease arrangement. With hire purchase, you’ll take ownership at the end of the agreement, while leases allow you to renew, return or upgrade the vehicle, or sometimes sell it on and keep a portion of the proceeds. Payment plans are monthly, including fixed interest and VAT, and the amount remains steady regardless of inflation or interest rises.
Refinance:
Already own a vehicle or vehicles? You can use them as collateral for a loan, or refinance them to release some equity.
What are the benefits of vehicle finance?
Whether you’re looking for just one vehicle or a fleet of them, there are many advantages to financing. By paying monthly, you’ll ease pressure on your business’s cash flow and help make your outgoings more predictable. This also means that you can invest in the type and model of vehicle that’s best for your business, rather than letting your existing cash flow limit your choices.
Thinking about a lease? Leases allow you more flexibility, making it easy to upgrade – or downsize – to a different model with minimum hassle. This can be especially useful when it comes to electric vehicles, which combine rapidly changing technology with a higher upfront cost. Some lenders offer finance products specially designed for EVs.
Are there any risks?
Because vehicle finance includes interest, if you choose to buy your car, truck or van this way, you’ll ultimately end up paying more than the original value. If you can afford to buy a vehicle outright, you may find that it’s more cost-efficient. However, many business owners find that the flexibility of paying over time is worth the additional cost.
If you decide on a lease or hire purchase plan, the lender will continue to own the vehicle. You won’t build up any equity, and you’ll have to maintain the vehicle whether you use it or not. The lender can also take the vehicle back if you don’t keep up payments on your finance plan.
Vehicle Finance for Your Business
Fund cars, vans, HGVs or specialist vehicles with flexible finance designed to protect your cash flow.
Spread the cost over manageable monthly payments while keeping your business moving.