Business Vehicle Finance Explained

• Car Finance,
• Aug 30, 2019

 

First of all, congratulations on getting your own business started, or getting into a business that requires a business vehicle. Maybe you’re here just to read about business cars finance, so in that case, congratulations in advance! You might wonder, why in God's name should I look for a business vehicle finance when I could simply get a personal car loan. The answer to that is really simple, comprising of the words “the business vehicle finance comes with much more benefits than a simple car loan.”

 

What exactly is Business Vehicle Finance?

 

There are plenty of loan types, and new ones are appearing out of thin air almost every single day… even if they’re literally the same as the old ones under a new name but hey, no judging. Business vehicle finance is basically the type of loan you get in order to acquire a business vehicle. It does not matter whether you need it for your business and its employees, or for yourself if you’re a freelancing trader. 

So, put simply, if you need a car for business and want the loan for the car, you’re looking at business vehicle finance as your best option since, as mentioned above, they are usually accompanied by a number of benefits which regular loans refrain from the offering. Whether you wish to start a small business, a multinational company, or work off as an individual or union of drivers, you would need a business vehicle and to get that, you might need a loan seeing as how rapidly the price of vehicles is skyrocketing.

 

Benefits of Business Vehicle Finance:

We keep repeating over and over again about how business vehicle finance has greater benefits than the other finances. It’s time you learn about this, Mathew, kneel.

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•  1- Lesser Prices: Business Vehicle Finances usually have lesser interest rates and corresponding fees. This means that if you want a cheap car loan or have bad credit, this might be the best option for you. Some of the options even take this a step further by keeping your vehicle as security and allow you to pay back the amount with a much less interest rate than any other loan types might get you. If you wish to learn more about secured car loans, you can head over to this page.

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•  2- Easier Terms: Most of the times, Business Vehicle Finances lend off at easier terms, i.e. you can pay the amount back on relatively flexible terms than if you get a personal loan or a(n) (un)secured loan.

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•  3- Additional Features: Many types of business vehicle finances allow you to get some additional features for absolutely no price since they come off as complementary add-ons. These may include a renewal of the vehicle after the end of the term (meaning you will get a new business car after the time period set during the loan agreement), novation or novated lease (which deducts a certain percentage of your income as repayment), or some tax benefits.

• Insurance Benefits: Low insurance cost might be encapsulated inside business vehicle finances since the best car finances also allow you to pay lesser insurance than the others so you’re only obligated to (for example) liability insurance and be exempted from others.

 

Options of Business Vehicle Finances:

You have a plethora of options to choose from while you are considering taking a business vehicle loan. Most of them cover the entirety of the aforementioned benefits, while some do not and have their own set of benefits.

 

•  1- Hire Purchase: Hire Purchase is similar to secured car loans where your vehicle is kept as a security or collateral and be repossessed by the lender should you fail to abide by the terms of the agreement. In this method, you pay monthly installments to the lender after taking money from them and buying a car and eventually, you get the ownership of the vehicle once you have paid off all your debt.

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•  2- Lease: Since there are no down payments involved in leasing your business car, this option is, by far, the most used and popular among the business owners and employees. A lender buys a vehicle for you and you pay him on agreed terms a fixed price. After the term ends, you can either pay the remaining amount and get complete ownership of the vehicle, exchange it for a new one, or renew the deal to get the most out of it.

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•  3- Novated Lease: Put simply, this is a lease in which you do not pay the money upright, but instead it is deducted from your income. You will have to stay employed in the business you got the vehicle for/from until the term finishes.

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•  4- Mortgage: In this option of business vehicle finance, you get the ownership of the vehicle upright but have to pay the money back to the person you borrowed it from as mortgage.

 

What to keep in mind while getting a Business Vehicle Finance?

If you’re considering getting a loan for your business car, you might need to look at and keep in view some things too. You should never go on trying to get a business vehicle finance while overlooking these points:

 

•  1- How much credit score do you have? Your credit score can determine which car you can get and whether or not you can afford to pay it back. If you are considering something way out of your budget, don’t. It is never a good thing to look for things that may prove harmful to you in the long run. If you want a bad credit car loan, try looking for secured car loans.

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•  2- What are you going to use the business vehicle for? You must first list out the uses of your business vehicle. If it is going to be used a lot, you should consider getting a lease since you could renew the car at the end of the term. If you are not going to use it much, go for the one with the lowest cost and just okay quality since it will prove way useful in the future.

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•  3- What risks are you taking? If you are looking at a high risk, low pay, best advice: don’t. Reconsider your options. Secured car loans or business vehicle finance might provide you with enough to pay it back with your vehicle as collateral, but never put your house on the line. Is it really worth losing your house for a business car? Absolutely not. Never take ‘huge’ risks if you are unsure that you can cover for them.

 

What is the best option for business vehicle finance?

It’s all up to you! Several factors contribute to making an option ‘best’. If an option best serves your needs and does you no harm in the long term, then it obviously is the best option for you.

One thing you do need to know from us is that whenever you are going to buy a car, always run background checks on it; you might not know what you might find that way. QuickREVs offers to do it efficiently and allows you to run VIN check, Car History Check, and PPSR search if you live in Australia!