Finance for vehicles for hire

In recent years, there has been a rise in demand for vehicle rental.

The costs of ownership are high, and many people lack permanent parking spaces. Hiring a car as needed can be more cost-effective for them than buying, and greener.

With the cost of buying and owning a car continuing to climb ever higher, opportunities for car hire businesses are growing fast. Of course, there are challenges. It is highly competitive and you’ll need to carefully consider the market sector you’re trying to connect with. Corporate executives looking for prestige may have very different needs to a family setting off on holiday. 

You might also want to consider vans. Providing light vans for removals or transporting heavy goods, can enjoy demand from both private and business customers. 

But whatever niche you want to serve, you will be faced with a second challenge - that of finding the most competitive finance for the vehicles you need. At Rangewell we can help.  

There are plenty of dealers who can help you find suitable vehicles - but what about the finance?

At Rangewell we know that there are many ways to finance vehicles for business and the most appropriate approach may depend on the type of vehicles you want.

A new vehicle might be more reliable, and manufacturers discounts may mean substantial savings on list prices.

However, the fastest rate of depreciation in car value takes place when you drive it off the dealer forecourt. Buying a used car can help to reduce the cost of depreciation, and a good used car will be cheaper to buy. Car sales have been slow in recent years, which can mean there can be more used cars for you to choose from and that you can also get some really good deals.

It is possible to buy high quality, guaranteed low mileage used vehicles, which have full service history and will still be under warranty. This would give you all the appeal of a new vehicle for your customers, without the costs to you.

Dealer finance - and why it can be an expensive option

Of course, few new businesses will have sufficient reserves of cash to buy new or used vehicles outright. 

One of the most popular methods of buying a car - leasing - may not actually be suitable. It is unlikely that you will be able to lease a car or van for hiring out with a conventional leasing arrangement. 

You may have to buy vehicles outright rather than lease them.

However, you may be able to start with second-hand models. Clean, low-mileage vehicles can sometimes be found at auctions, but you may prefer to buy through a dealer.

This can seem to make things easier. Your vehicle dealer will be pleased to offer finance plans on used as well as new vehicles.  Some will even offer 0% finance to help them close a deal, especially if it is a new vehicle. But remember, borrowing money always costs money. If the dealer can afford to offer 0% finance, he needs to make the cost of the finance back from you in some other way. 

This can mean that the purchase price is inflated to pay for the finance - and dealer finance is often a costly option with lots of caveats. 

Many dealers actually expect to make more from the sale of vehicle finance than they will from the vehicle itself.

You could be better off asking for the dealer’s best price for cash and paying for your vehicle with finance from a specialist lender. 

At Rangewell we can provide a number of finance solutions to suit the needs of you and your business - not the needs of the dealer. We can help you get a quote customised to your business needs by comparing hundreds of vehicle lenders.

Vehicle Asset Finance solutions include:

Hire Purchase

With Hire Purchase, you ‘hire’ your vehicles until you’ve paid enough to ‘purchase’ them. You’ll normally have fixed monthly repayments so you can keep in total control of cash flow during the term of the loan. When you’ve finished making repayments, your business will own the vehicle.

Unlike leasing agreements, there will be no mileage limits or other restrictions.

HP agreements can run up to 60 months - although shorter loan periods are more common for vehicles - and you can continue to use the vehicle after the end of the agreement as you will own it outright once the final payment is made

Lease Finance

Leasing gives you flexibility. You can regularly upgrade your vehicles - important if you are catering to the executive hire sector. With some leasing arrangements, you have the option to own them at the end of the term, or simply give them back. 

However, most leasing arrangements will exclude vehicles for hire. It may be necessary to set up a special kind of lease specifically aimed at the vehicle hire industry.

Contract Hire

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 means you only finance the value of the vehicle during the time you use it. 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 could be particularly appropriate if you need prestige vehicles for your fleet.

Why come to Rangewell for Vehicle Finance?

At Rangewell, we work across the entire lending market. Our team knows the lenders who specialise in Vehicle Finance, and we know the lenders who are most appropriate for the vehicle hire industry.

Talk to our experts to discuss the details.