An introduction to commercial vehicle finance
What is commercial vehicle finance?
If you need a car, van or LCV vehicle to run your business, commercial vehicle finance is an easy way to spread the cost over a period of time. Whether you are a sole trader, limited company or partnership looking to buy your first van or upgrade or expand an existing vehicle or company fleet, you can use this type of finance to avoid a large initial outlay and, in some instances, potentially reduce your tax liabilities using advice from your accountant. Commercial vehicle finance can be used to buy a new or second-hand car or van, along with specialist commercial vehicles including tractors, buses and coaches or HGVs, so give us a call to get your business moving.
What vehicles can I fund with commercial vehicle finance?
Although not exhaustive, here are some of the vehicle types we can help you to finance:
- Buses
- Coaches
- Curtain siders
- Drawbar vehicle
- Dropside
- HGVs
- LCVs
- Lorries
- Panel vans
- Minibuses
- Pick-ups
- Refrigerated vehicles
- Rigids
- Recovery vehicles
- Tankers
- Tractors
- Trailers
- Tippers
- Vans
What are the different types of commercial vehicle finance?
There are three main types of commercial vehicle finance?
- Hire purchase agreement
- Commercial vehicle finance lease
- Contract hire
What are the benefits of a using a hire purchase agreement to buy a commercial vehicle?
With a fixed rate of interest and regular monthly payments, a hire purchase agreement can make the cost of purchasing transport for your business affordable. Enabling you to keep more working capital in your business and to claim tax allowances, a hire purchase agreement lets a business acquire a vehicle with minimal outlay upfront and, at the end of the term, own it outright.
What are the benefits of a commercial vehicle finance lease?
Although similar in structure to a hire purchase agreement, with a commercial vehicle finance lease the vehicle remains the property of the finance company at all times. Both throughout the duration of the lease and at the end of the term, the company will not own the vehicle. If a company is still using and wishes to continue to use the vehicle at the end of the lease period, a new agreement can be put in place to facilitate this.
VAT is payable on the monthly repayments throughout the duration of the lease, rather than in full at the time of purchase. The VAT can be claimed back and rental charges offset against profits, so a commercial vehicle finance lease offers significant tax benefits and is often used by sole traders, limited companies and partnerships. With a low deposit and fixed payments, along with a choice of fixed or variable interest rates, an agreement can be tailored to be structured in line with a business’s cashflow.
What are the benefits of contract hire?
Contract hire, also referred to as an operating lease, is a type of vehicle finance which suits VAT registered companies as 100 per cent of the VAT can be reclaimed, so long as the vehicle is used solely for the business and not for personal use. Up to 100 per cent of the rental costs can also be offset against taxable profits. With a contract hire agreement, typically taken over 12-60 months with a pre-agreed mileage, a monthly rental is paid which can cover full maintenance, including brakes and tyres, and road tax. At the end of the contract hire agreement, the vehicle is returned to the finance company which eliminates any risk of depreciation or difficulty in disposing of the asset. With fixed monthly payments, the cost of contract hire can be significantly lower than a lease or hire purchase agreement.
Will I be eligible for commercial vehicle finance?
Many types of businesses can apply for commercial vehicle finance including sole trader (self-employed), limited company (Ltd), partnerships, limited liability partnership (LLP), public limited company (PLC) or charity. The finance agreement must be in the name of the business and the vehicle must be insured by a company insurance policy.
Do I need a deposit to buy a commercial vehicle?
While most lenders request a minimum deposit of five per cent of the vehicle cost, some will consider an application to purchase a company car or van with no deposit. This can also include the trade in of an existing vehicle, as well as a ‘cash’ deposit.
Can I use commercial vehicle finance for my haulage or HGV business?
Haulage and HGV vehicles often require a large investment and specialist finance can provide a way to grow your business without using working capital. Haulage and HGV finance can be used to buy new equipment including:
- Commercial trucks
- Refrigerated vehicles
- Tippers
- Dropsides
- Flatbed trucks
- Curtain-sided trucks
- Trailers
- Articulated and rigid-based trucks
- Fire engines
- Rubbish collection vehicles
- Cement mixers
- Tankers
- Car transporters
Can I use commercial vehicle finance to buy an electric vehicle?
It’s estimated that one in four cars on the UK’s roads are now electric and increasingly businesses are looking to invest in electric vehicles (EVs) as a more sustainable form of transport which helps to reduce their carbon footprint and protect the planet’s resources. Commercial vehicle finance can be used to purchase EVs and, along with reduced operating costs, can offer a strong transport solution for many sectors.
Why use Complete Commercial Finance for commercial vehicle finance?
Complete Commercial Finance can offer access to a wide range of lenders and specialist finance for all your commercial vehicles needs. This enables you total freedom of choice across dealers, manufacturers and vehicles across the UK with funding in place to finance the transportation you need at the rate your want to pay.
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