Vehicle and Fleet Finance

FLEET CAR FINANCE

Fleet cars are generally known as motor vehicles either owned or leased out by a business, government agencies or any other organisation and not a family or individual. Examples include vehicles belonging to car rental companies, public utilities, public bus companies, taxi companies, police departments, business owners (either to deliver goods to customers or for sales representatives for business travels) etc. They are vehicles intended for work purposes.

In financing fleet cars, you need to choose the right vehicle finance method that can suit you. This is important because the decision could be somewhat complex with the wide choice range and the constant change in tax rules. Fleet car financing is a bit complex but you need not get into trouble because of this. All you need do is to follow the simple tips discussed below.

Before anything else, you need to ask some basic questions such as how you would want to use the vehicle, if the vehicle will be your own or just in your control. The most important question is affordability- can you afford the monthly repayments if any?

The first thing that should come to your mind about fleet car financing is talking to an expert. The best advice is going to be from your specialist. You should keep some questions answered in your heart concerning the fleet cars. You need to consider what you would need the vehicles for and how long you would want to keep them. Another thing you should do is to consider the several finance options available.

You might buy the vehicles on your own if you have the money. Some companies are buoyant enough to finance the purchase on their own with no need for loans from banks or any other lender. Companies can use the working capital available to buy needed vehicles outright. Even though this eliminates the chance of incurring more debts to the business, it could also put the company in a way that cash flow is affected. Companies who operate on a cash-only basis may find it difficult to seize the advantage because they lack the cash necessary to engage in purchase of fleet cars. There is no complication at all. All you need is to get to the dealers, give the money and you get your vehicles. Once you purchase them, they belong to you.

Another way to finance your fleet is either by Contract hire or contract purchase. When you finance your fleet car with a Contract purchase agreement, you get to pay instalments each month. This is not for you take ownership but for you to be in charge and control. The cost of the vehicle is calculated at the end of the contract but depreciation is factored in. Contract purchase is more expensive but it provides increased flexibility. It includes an optional kind of payment called balloon payment. This is optional but it allows you to take full ownership at the end of the contract.

Another option you might want to consider is hire purchase. If you really want to take full ownership of the vehicle at the end of the agreement, a hire purchase may be your best choice. In this kind of finance, you pay a huge deposit, the remaining value of the asset is paid as monthly instalments. The interest rates are influenced by your credit rating so you need to get the best deal possible.

Companies can get loan which means that the business is actually buying the vehicles and will have full ownership when the loan term is over.

Leasing is also another way to finance your fleet car. It is similar to contract hire but where you have to pay a fixed amount of money to rent the car. This method could be cost effective and economical for you. Lease financing helps businesses to procure the cars, vans, trucks and other equipment needed in carrying out to business, without necessarily investing cash reserves into vehicles that will definitely depreciate quickly. Your payments each month is calculated as the cost at the end subtracted from the actual cost of the car. This means that the only thing you are paying for is the depreciation value of the vehicle during the period of time the vehicle is in your control.

Your salary could also be used in what is known as salary sacrifice. It is a means that allows workers to use part of their salary in exchange for a non-cash benefit such as this. Both company and the workers can agree on a salary sacrifice scheme.

Another strategic means to finance your fleet is to combine any one of the methods above. Some companies employ this combination financing method. This could be visible when companies use banks to fund their fleet and are also using contract hire with a company owning vehicles.