There are a number of ways to finance a costly vehicle purchase. Ensure you choose the right option for your business
Whether you are looking for a car, a van, a truck, a trailer, or even a bus, there are a range of ways of funding the purchase of a vehicle for your company. While all aim to help spread the cost of what is often an expensive investment, each funding solution offers a slightly different way of achieving this:
- Hire purchase – Hire purchase is an option if you would like to become the legal owner of the vehicle. You will make a series of instalments over a set period of time, with the option to purchase the asset at the end of the term. As the legal owner of the vehicle, there may be certain tax benefits you can take advantage of.
- Lease agreement - Leasing is a way of renting the vehicle you want without becoming its owner. You will be able to enjoy sole use of the vehicle for the life of the agreement, however, after this point, you can then choose to hand the vehicle back, continue with the lease for an additional period of time, or trade the vehicle in for a different model or more up to date version. This option therefore gives a huge amount of choice and flexibility as you are not tied into ownership.
- Asset refinancing – If you already own a valuable vehicle, you can use it as collateral to obtain funding for your business. The finance company will purchase the vehicle from you and then immediately rent it back to you. You will retain full use of the vehicle while the agreement is in place and at the end of the term you will own the asset once more. This can be a viable alternative to a traditional loan if your company needs an injection of capital.