Commercial vehicle finance options and what they mean to you

commercial-vehicle-insurance

When it comes to buying a new combi van, your method of finance is likely to be at the forefront of your mind. After all, you’re likely to be buying for your business and cashflow is of the utmost importance, especially if you’re buying for a new business or small startup. There are a number of options available to you, though, and you might just be surprised at the flexibility…

 

Hire purchase

This is a simple arrangement in which you pay a deposit followed by monthly instalments over an agreed term, at the end of which you own the vehicle. The benefits include being able to budget easily and owning the vehicle at the end of the term.

In addition, business customers benefit through interest charges being allowable against tax. If you’re looking to own the vehicle and want to know exactly what you’re paying every month, this is ideal.

 

Balloon Hire Purchase

Some manufacturers, such as Fiat Professional, offer more complex and flexible hire purchase products, such as a balloon arrangement. If, for example, you were looking at the new Fiat Ducato, your arrangement under a balloon hire purchase arrangement would be much the same as above, but with a larger balloon payment deferred to the end of the agreement. This reduces your monthly payment and allows you to budget for the final balloon amount early on.

This is ideal for startup businesses who are struggling for cash but expect to be in a much better position after a couple of years.

 

Contract Hire

If owning the vehicle isn’t a major concern for you, simply leasing the vehicle allows you to drive hassle-free, without any of the worries of ownership. Contract Hire is usually VAT-free, reducing the cost of your payments and your payments are usually allowable against tax.

Your road fund licence will often be included and there’ll usually be a maintenance package which includes all of your servicing costs, making it very easy to budget.

This is ideal for companies which aren’t concerned with vehicle ownership but simply need a commercial vehicle to carry out their business. It’s also perfect for instances where you need to budget for all the costs of running a vehicle in one simple monthly payment, without the unexpected servicing and maintenance costs which are associated with owning the vehicle outright.

 

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