Acquiring business vehicles with Asset FinancePublished on 31st May 2017 - Last update on 8th January 2019
For many British SMEs, business vehicles play an essential part in day-to-day operations. From haulage and construction to parcel delivery services, without them many businesses wouldn’t be able to reach their customers, severely restricting their share of the market. Consequently, due to the significance of vehicles in business, many business owners are either seeking to add or expand their existing fleets. However, doing so can be pricey and total more than what many SME businesses can afford. That is why we at Rangewell are helping more and more business owners gain access to Asset Finance for acquiring business vehicles.
What is Asset Finance?
Fast and flexible, there are no limits to what assets this package can secure. Asset Finance helps business owners from a diverse range of sectors acquire all the equipment they need to function effectively. As anyone will tell you, purchasing a high-quality vehicle can be expensive. So what happens if your goal is to add or expand an entire fleet? The cost requirements are certain to be colossal. This is where Asset Finance can step in and make available a variety of finance products such as Secured Loans, Contract Hire, Hire Purchase and much, much, more!
What are the benefits of Asset Finance?
Asset Finance is a fast and effective way of securing an extensive range of business assets, which also offers a vast number of benefits too. By choosing this package you can spread out the requirements for essential business vehicles, easing the burden placed upon your business’ finances and cash flow. Plus, depending on the product, you may even be able to reclaim VAT and capital gains, but be sure to check with your business accountant.
How does Vehicle Finance work?
Featuring a broad spectrum of finance solutions, Asset Finance is used and implemented in a number of ways to benefit your business’ development. Each finance solution works in its own unique way to support the purchasing and borrowing of vehicles. The only question you need to ask is ‘which finance package is right for your business?’
An excellent way of purchasing new a business vehicle or even an entire fleet. By applying for this means of finance your business could acquire a lump sum ranging from £5,000 to £1,000,000 and use it to support your purchases. Subsequently, from beginning to end, you will be the owner of the assets in question. Yet, because the finance product is secured using the assets, should your business fall behind in the fixed monthly repayment the lender can seize said assets to recover the remaining costs. The fixed monthly repayment process lasts for an agreed term or period. Loan terms can last between 1 – 6 years, depending on whether the agreement is long or short term.
Contract Hire is another form of Operating Lease with terms that typically last between 1 – 3 years. By choosing to implement this solution in your business you’re, in fact, opting to borrow vehicles rather than pursue ownership. How this solution works is by having a lender purchase vehicles on your behalf. They will then allow to use them in your business in exchange for regular fixed monthly rental payments. Rental payments are worked out on the basis of how much revenue the vehicles are expected to earn, the length of the agreement and any other relevant factors.
Depending on the lender’s discretion, you may or may not be subject to an agreement involving maintenance, for example, insurance, tyre cover, relief vehicles and breakdown cover. Either way, the vehicles remain the property of the lessor. At the end of the term, you will be asked to pay a balloon payment and can either return the vehicles, upgrade to a higher-spec model or extend the agreement.
Another highly popular way of acquiring key vehicles for your chosen sector and eventually gaining ownership, Hire Purchase is best placed for highly expensive vehicles and those that don’t quickly depreciate in value. How this finance solution functions is by first allowing a finance lender to purchase the vehicles in question on your behalf. However, to acquire their use in and around your business, you must first pay an ‘initial deposit’ or lump sum. An initial deposit usually ranges from 10-20% of the asset’s overall value. As soon as this has been paid you can use the vehicles in your day-to-day operations, whilst also paying fixed monthly repayments for an agreed period. The repayments reflect the remaining cost and take into account the length of the term, fees, interest and so on. Hire Purchase terms can last from 1 – 3 years, or possibly longer. Once the repayment process has been completed in full the finance lender will transfer ownership rights to you.
Of course, knowing exactly which finance product is right for your business can be a difficult endeavour. Yet, it’s made even more frustrating and alarming by being uncertain about whether you’re truly getting the best value solution for your business. Along the road toward business finance, many SMEs may have turned to their bank only to get pushed aside in favour of big business. It can leave you feeling alone and disheartened, unsure of whether to delay or cancel any projects you may have had. But with Rangewell you aren’t alone. We work with over 300 business lenders to grant your business access to a growing list of 23,000 business finance products. With our services and expertise, we can help you source the perfect finance solution to fulfil your business goals!
Our values are simple – We’re on your side. Our services are clear and transparent. We support a wide range of SME businesses of every shape and size, for finding every type of finance. Follow us on Twitter and LinkedIn for business tips and tricks, and feel free to call us on 0203 637 2340 if you’d like to chat about what we can do for you.
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