Commercial Vans and Trucks

Commercial Acquirement Options

Commercial Outright Purchase

If you have the funds available to buy the commercial vehicle outright then this can be a smart move for finance charges will not be incurred and the asset can be seen as wholly owned on the balance sheet. The major consideration is whether or not the capital would be best invested in other areas, either personally or on a business level.

Contract Purchase / Personal Contract Purchase

PCP is becoming increasingly popular way of financing commercial vehicles, due to the overall flexibility of the contract. The initial deposit is flexible, the repayment periods are flexible - normally between 2 and 5 years, with a final, optional, settlement figure (Minimum Guaranteed Future Value or MGFV) which is calculated at the time of purchase. The 4 main options available at the end of the contract are as follows:

1. 1. Make the final balloon payment and take ownership of the vehicle
2. 2. Trade the vehicle against a replacement vehicle, which releases any equity in the original contract into the new contract, normally forming the deposit
3. 3. Return the Vehicle without making the optional balloon payment therefore releasing you from the contract. Any excess mileage or damage charges will be imposed in the case that they have occurred
4. 4. Dependent on provider - Extend the agreement by spreading the balloon payment over a further period

When financing your next commercial vehicle take serious consideration when assessing PCP for the benefits are vast, as seen below:

1. 1. Low 'van (personal) contract purchase' monthly payments
2. 2. Incredibly flexible
3. 3. Payments not subject to VAT
4. 4. Available on all new and some nearly new commercial vehicles
5. 5. The decision on what to do at the end of the contract can be left until the end of the agreement

Commercial Finance Lease/ Van Finance Lease

As an option available when considering how best to finance your commercial fleet, finance lease is a leading facility that offers a tailor made contract with decent flexibility. The commercial vehicle/ van is hired for a fixed period of time without the option of ownership. The monthly repayments cover a percentage of the vehicle depreciation costs plus finance charges.

Benefits of financing your van/truck/commercial vehicle through finance lease can be seen below:

1. 1. Improved cash flow due to fixed monthly rental
2. 2. VAT reclaimable (depending on usage)
3. 3. Rentals can be offset for business use (allowable against taxable profits)
4. 4. Use of the vehicle without large capital outlay
5. 5. Possible benefit from the net sale proceeds

Commercial Contract Hire/ Commercial Leasing

One of the most common ways to finance commercial vehicles nowadays, contract hire gives all the operational benefits of ownership without the headaches of running costs and vehicle disposal. The contracts are flexible in relation to deposit and repayment periods, and an optional maintenance package, if required.

Commercial Contract Hire has vast benefits for the business user, as can be seen below:

1. 1. VAT reclaimable (depending on usage)
2. 2. Rentals can be offset for business use (allowable against taxable profits)
3. 3. No disposal risk or hassle
4. 4. Fixed and predictable costs
5. 5. Outsourced administration
6. 6. Release capital and takes the commercial vehicle off the balance sheet.

Commercial Hire Purchase

HP is a finance option which delivers ownership as a conclusion. Hire Purchase is another popular option due to its flexible approach. Select your deposit amount and how long the agreement is to be over, and then a monthly figure can be calculated.

The benefits of Hire Purchase can be seen below:

1. 1. Ownership of vehicle
2. 2. Flexible deposit
3. 3. Fixed or variable interest rates
4. 4. Vehicle appears as an asset on the balance sheet
5. 5. An additional line of credit