Whether you need a single delivery van or a fleet of heavy-duty trucks, understanding your financial options is crucial. Let’s explore the different finance options for commercial vehicles.
1. Hire purchase
In a hire purchase agreement, you’ll typically make an initial deposit, followed by monthly payments over a period your financier agrees. The vehicle becomes yours once you make the final payment at the end of this period. This option benefits those wanting to own the vehicle outright at the end of the lease term but wish to spread the expense over several months.
2. Lease purchase
Like a hire purchase, a lease purchase allows you to spread a vehicle’s or fleet’s cost over time. The key difference between the two is a larger ‘balloon’ payment at the end of the lease. It often results in lower regular monthly payments than hire purchases, freeing up capital for most of the lease period.
3. Operating lease
An operating lease is an agreed lease over a fixed period, typically paid monthly. The difference between this lease and others on the list is that the vehicle is returned at the end of the rental period, freeing the business from ownership concerns such as constant maintenance or depreciation.
4. Contract hire
Contract hire is an operational lease where businesses can hire vehicles for a fixed period or predetermined mileage. The vehicle is returned to the lessor at the end of the term. It’s perfect for those who prefer to upgrade their fleet regularly without ownership responsibilities or for businesses needing to temporarily expand their fleet.
5. Finance lease
A finance lease repays the entire vehicle value over the lease term without outright purchase. At the end of the lease period, you can either sell the vehicle(s) and share the proceeds with the lessor or continue leasing for a nominal fee.
Whichever option you lean towards, assessing your business’s needs and financial capability is essential. Consulting with an expert finance provider like Asset Alliance will ensure you make a decision supporting your operational and financial goals.
Speak to an expert at Asset Alliance today.