Without proper Vehicle Equipment Finance, a business can quickly become burdened by large expenditures without providing a viable return on the initial investment. Many companies had failed in the past because they purchased too much equipment when financial conditions were good. At this point, there are several options available to businesses that wish to obtain equipment financing. While some options may be more appropriate than others, such as commercial vehicle financing, other options should be considered to help the business get started and remain profitable for years to come. The purpose of this article is to provide an introduction to commercial vehicle financing.
Commercial vehicle finance can be accomplished through several methods, including dealer finance, broker finance, manufacturer finance, or third-party financing. Each one requires the business owner to select a lender on their terms. To determine which option is best suited to a particular business’s needs, a comparison of each choice should be made. To do this, the potential borrower must evaluate each type of finance agreement and look for similar features and costs. Doing so will allow the business owner to make an informed decision between several different commercial equipment finance options.
Dealer Financing: dealerships are the most common way to acquire a commercial car loan. This method works well for small businesses that do not wish to risk putting up collateral or businesses that are starting and do not yet have enough assets to qualify for a bank loan. Because dealers often sell cars with a loan attached at the time of purchase, the dealer will extend the dealer car finance until the end of the loan. Because dealers receive regular payments, the dealership will use this as a tool to maintain a healthy cash flow.
Broker Finance: Used to be, brokers could not obtain commercial car loans offered by dealerships. Today, however, certain brokers can purchase commercial car loans without securing any collateral. This allows the broker to buy a vehicle finance program at a significantly lower cost than the typical financing cost. In many cases, these types of vehicle finance programs also include without residuals. This is beneficial because most vehicle buyers expect to have a residuals amount at the end of their business car loan term.
Leasing: A common alternative for financing purchases is to take out a leasing program. Leasing companies offer various financing options, including the lease with Option To Buy (EOB). Leasing companies usually charge a fee each month in addition to the monthly payment determined during the signing of the lease. Some leasing companies offer different financing plans, such as 0% financing and various other options. Leasing companies usually require minimal collateral, making them attractive to borrowers with bad credit. However, it is essential to note that leasing companies typically have higher financing fees than dealers.
For many business owners, the best choice is to obtain a vehicle lease to save on monthly costs. During the lease period, owners can use the funds to pay for the depreciation costs on their leased vehicle. During the lease period, they would not be able to take advantage of the many special discounts and incentives offered by car lease suppliers. For this reason, many people prefer to obtain a vehicle lease, mainly when the owner needs a new vehicle but does not have sufficient cash on hand to make a down payment.
Leasing: A second option to obtain a vehicle finance program is to enter into a lease deal. A finance company will agree to finance a specified amount for a fixed period in a lease deal. This option is more attractive to small businesses with limited resources to invest in buying a vehicle outright. The terms of the lease deal are often quite beautiful, resulting in low monthly payments. This option is less attractive to borrowers with a poor credit history or business bankruptcies.
Vehicle equipment finance programs allow borrowers to purchase the right vehicle at competitive prices. They also enable business owners to increase the efficiency of their business by reducing the cost of leasing. Finance programs can also help companies to ease cash flow pressures associated with purchasing vehicles. It is therefore advisable to consider all available financing options before entering into a vehicle finance program.