While most car dealers offer small business auto finance you can save money by comparing commercial auto loans or commercial truck loans from across the UK market. That includes alternative lenders who have wider acceptance criteria and specialise in corporate car finance.
Because auto finance is a type of asset finance the benefits are similar: Either you decide for a hire purchase in order to own the vehicle, or for lease finance if you just want to use it and then upgrade to a newer model. In any case, you make payments in smaller chunks than buying the vehicle outright. Some lenders also offer balloon payments to keep monthly repayment costs down: That means you only pay a portion of the principal payment back each month, with a larger lump sum due at the end of the loan term.
For example, many trades businesses go for hire purchase as they want to either add branding on their vans or cars, or make small alterations. On the other hand, lease finance can be particularly tax efficient as you can claim all monthly leasing costs as expenses for your business.
Which commercial vehicles are eligible for asset finance?
Apart from loans for corporate cars and vans, specialist lenders cover HGV and commercial truck loans, asset finance for buses/coaches and yellow plant, caravans and motor homes, trailers and even horse boxes. In addition, specialist electric car vehicle finance is available from an increasing number of lenders.
How To Use A Commercial Auto Loan For Refinance
Other than buying new or used assets certain lenders allow businesses to take cash out of the cars, vans and trucks they already own. Depending on the lender, and the type and quality of the vehicle, you can raise a certain percentage of the asset’s value. This is called Sale and Lease Back. Especially if you own a fleet of vehicles, refinancing them can be one of the cheapest ways for your business to manage its cash flow through external funding.
What Does A Car Loan For A Commercial Vehicle Cost?
When funding a commercial vehicle through asset finance, lenders charge interest at an agreed fixed rate. This rate typically reflects the quality and type of the asset, your business’ trading history and how long you need the funding for. At the start of your arrangement, some lenders charge a one-off document fee between £100 and £300.
Does My Business Qualify For Auto Finance?
If your business takes out a commercial vehicle loan the lender will first use the car, van or truck as a security. Further than that, many lenders will want to know about your business history and financials in order to determine the most suitable rates: At the most common, your business’ last year’s accounts or a business plan for start-ups will be required, along with the last management accounts. Even if you personally or your business have a slight adverse credit history, and IVA or CVA, there are lenders who will consider your application.
Before you apply for auto finance consider the amount of deposit you are able to make, and which type of vehicle you want.
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