Electric vehicle funding: Cutting the cost of saving the environment
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The Government is committed to increasing the numbers of electric vehicles on the road - to meet ambitious climate change targets and ensure cleaner air quality in major cities.
This means that both petrol and diesel vehicles may need to be phased out by businesses of all kinds - and particularly by businesses serving urban areas - in favour of hybrid, electric and PHEV cars and vans.
Around 141,000 alternative-fuel vehicles were registered in 2018 and numbers are rising fast as businesses see the advantages in reduced running costs and increased reliability. There are also ecological dividends, both in the form of immunity from pollution and congestion charges and from having ‘green’ credentials.
Why your business needs to go electric
The government policy to promote alternative fuels means valuable financial incentives. These can include reduced Benefit in Kind (BIK) taxes, generous grants, National Insurance Savings, the introduction of new bands for EVs from 2020/21, exemptions from Vehicle Excise Duty (VED) and special Capital Allowances for ultra-low emission cars and electric vehicles. There may also be 100% first-year capital allowance - and electric vehicles can also avoid urban congestion charges.
Your accountant will be able to discuss the impact of going electric on your business, including:
- £3,500 plug-in grant
- Exempt from metropolitan Congestion Charge
- Access to clean air zones, including the London Ultra Low Emission Zone
- No car fuel benefit charge
- Reduced National Insurance contributions
- Reduced benefit-in-kind tax
- Eligible for salary sacrifice schemes
At Rangewell we were recently approached by a city courier business to discuss funding for an electric fleet. We can offer a range of tailored financing solutions including loans, lease finance, Contract Hire and Hire Purchase.
A loan may be a simple way to provide funds to make you a cash buyer - which may be helpful if you want to negotiate a purchase.
However, in most cases, you may find that Asset Finance can offer a more cost-effective solution for your business.
Looking to go electric with your business vehicles but want to keep your costs down? Find out more about what funding options are available for commercial electric vehicles or talk to one of our team today
With a lease, you can drive a cutting-edge vehicle for a modest deposit and affordable monthly costs - and no capital expenditure. Many electric vehicle owners currently rent their batteries - leasing the whole vehicle is a logical step. Electric technology is developing fast. Leasing for a fixed period means avoiding tying up money in a car or van that may become outdated.
Contract Hire is a special kind of leasing arrangement. Payments are calculated on the purchase value less the estimated value of the vehicle at the end of the agreement. This helps keep your monthly repayments down and makes it simple to switch to a new vehicle at the end of the agreement. Contract Hire might be particularly appropriate if a prestige vehicle is required.
Hire Purchase allows you to ‘hire’ the vehicle until you’ve paid enough to ‘purchase’ it.
With Hire Purchase, you’ll normally have fixed monthly repayments so you can manage cash flow during the term. When you’ve finished making repayments, your business will own the vehicle outright. HP can run up to 60 months and could provide a solution for vehicles with a long projected life.
What about dealer finance?
All vehicle dealers offer finance plans - but the deals they offer may be designed to maximise their profits, not cut your costs.
The purchase price of the vehicle will be inflated to pay for the finance - especially if they can offer 0% finance to help close a sale. You could be better off asking for their best price for cash and paying for the vehicles with finance from a specialist lender. Your overall costs and monthly payments could both be reduced.
Are you ready to go electric?
Getting the finance that’s right for your business fleet could mean major savings for your business as well as meeting your responsibilities to the environment - which customers and clients are increasingly looking for when they choose a supplier.
Talk to our vehicle finance specialists to discuss the options, and we can find the lenders with the most competitive rates and terms - ensuring that buying electric will cost you less.