Whether you need a work vehicle to carry tools and materials, a reliable estate with which to visit clients or a fleet of vehicles to make your logistics business a success, funding the cars, vans or trucks you need can be a challenge. Buying outright isn’t always the most tax-efficient or economical option. Take a look at what other funding options for new vehicles are out there and discover which choice might be the right one for you and your business.
Hire purchase
Customers pay all the VAT upfront followed by a series of instalments to pay off the total cost, plus interest. Once all the instalments have been paid, the customer has an option to purchase the vehicle for final payment, the vehicle then becomes the property of the customer.
Lease vehicles
Customers pay fixed monthly rentals based on the initial cost of the vehicle, the term of the lease and overall value. Lease purchase provides a more affordable and flexible outlook and allows businesses to manage their cash flow rather than handing over a lump sum for a depreciating asset. It becomes attractive when new vehicle models are released, technology becomes more advanced and reliable vehicles are required for business use. By choosing to lease, the vehicle becomes the property of the provider.
A loan
A business loan can be used to finance a vehicle, but once the vehicle has been purchased, it becomes a taxable asset and will also require an on-going maintenance budget to keep it in good condition. Note that the cost of the loan interest will also need to be factored into the figures when considering whether this is going to be the most economical model for your vehicle purchase. Also note that the longer you keep the vehicle, the more likely it is that costly repairs are going to be required.
Funding options for new vehicles – find out more
Whilst there’s no “one size fits all” solution to financing a vehicle, some options are almost always more cost-effective than others, particularly when tax efficiency is also taken into consideration.
Visit our Alternative Finance page to find out more about funding options for new vehicles.
Get in touch for further information regarding your vehicle financing options.
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