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Vehicle Asset Finance

How to get asset finance for your vehicle.

Vehicle asset finance can be a little confusing at first.  Maiinly because there are a number of different types of deals out there for business owners. 

However THE NUMBER ONE MAIN BENEFIT of vehicle asset finance is that you do not have a large outlay at the start of the deal ensuring you keep the cashflow from reducing.

There are five main types of vehicle asset finance, all with there ups and downs.

  1. Contract Hire -  Is very common among business users for financing a vehicle.  This offes a monthly fixed payment that is inflation proof.   Admin is slight, and in general you have the added security of guaranteed mobility should you need it.  Also, the funding is "off balance sheet". This iis any form of funding that avoids placing owners' equity, liabilities or assets on a firm's balance sheet. This is generally accomplished by placing those items on some other entity's balance sheet.  Don't worry about this, your accoutant can sort this out for you
  2. Contract Purchase - This is good if you are a new or non-VAT registered entity as it give you the change of buying a new or nearly new vehicle or commercial vehicle at a fixed, low monthly cost.  Once the finance is finished, the vehicle can be bought at a pre-determined price, or you can start a new contract and return the vehicle. This contract can include maintenance if you so wish.
  3. Hire Purchase or Lease Purchase - Hire Purchase gives you the opportunity to buy a vehicle over a pre-determined time period (usually 1-5 years).  Once all the finance agreement has been completed over the term the title of the vehicle transfers to you.  Lease Purchase can have a 'balloon' or lump sum payment at the end of the vehicle finance agreement to reduce the monthly repayments.  Both these options retain flexibility during the period of the agreement.
  4. Leasing -  This gives you have exclusive use of a vehicle for a set period of time - usually between 1 and 3 years.  Your monthly repayments include VAT, a bit of which can be got back from the VATman  provided you are VAT registered.  Monthly repayments can be kept low by including an initial payment towards your vehicle finance. or including a final 'balloon' or lump sum payment, or by extending the length of the vehcile financiial lease.
  5. Finally, there is Sale and Leaseback - this works similar to the well know property finance options now available.  This can be extremely useful if you already own a fleet of vehicles and want to release some of the worth from them but continue to use them.  Everything stays the same except you lease the vehicles from the vehicle finance company in return for a lump sum from them

As you can see Vehicle Asset Finance is flexible. 

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