Commercial Vehicle Finance: Helping Your Business Grow
Running a business requires a lot of investment, and for many businesses, owning commercial vehicles is a necessity. Whether it’s for transportation, delivery or other operations, having a fleet of vehicles can be costly. Fortunately, there are various commercial vehicle finance options available in Australia to help businesses overcome this hurdle.
Commercial Vehicle Finance: Understanding the Basics
Commercial vehicle finance is a type of loan specifically designed for businesses that need to purchase vehicles for commercial use. The loan covers the cost of the vehicle, and the business makes repayments over a specified period of time, plus interest. The repayment period can be tailored to the needs of the business, and there are options for new and used vehicles.
Types of Commercial Vehicle Finance
There are several types of commercial vehicle finance options available to businesses in Australia. Let’s take a closer look at each of them:
- Chattel Mortgage
This is a loan that is secured by the vehicle itself. The business takes ownership of the vehicle from the outset, and the lender takes out a mortgage over the vehicle. The business repays the loan plus interest over a specified period of time. At the end of the loan term, the business owns the vehicle outright.
- Finance Lease
This type of lease is suitable for businesses that require a vehicle for a specific period of time but don’t want to take on the risk of owning the vehicle. The lender purchases the vehicle and leases it to the business for an agreed period of time. The business makes regular lease payments plus interest. At the end of the lease term, the business can choose to return the vehicle, purchase it outright or extend the lease.
- Hire Purchase
This type of finance is similar to a chattel mortgage, but the business doesn’t take ownership of the vehicle until the end of the loan term. The lender purchases the vehicle and hires it out to the business. The business makes regular payments plus interest. At the end of the loan term, the business can choose to take ownership of the vehicle by paying a residual payment.
- Operating Lease
This type of lease is similar to a finance lease, but the lease term is shorter, and the payments are generally lower. At the end of the lease term, the business can choose to return the vehicle or extend the lease.
Benefits of Commercial Vehicle Finance
Commercial vehicle finance offers several benefits to businesses in Australia. Here are some of them:
- Flexibility
Businesses can choose from a range of finance options to find the one that best suits their needs.
- Cash Flow Management
By financing a vehicle, businesses can manage their cash flow more effectively. Instead of paying a lump sum upfront, businesses can make regular payments over a longer period of time.
- Tax Benefits
Businesses may be able to claim tax deductions for the interest paid on the loan, depreciation of the vehicle and other expenses associated with owning and operating the vehicle.
- Improved Credit Rating
By making regular repayments on a commercial vehicle loan, businesses can improve their credit rating, making it easier to obtain credit in the future.
Final Thoughts
Commercial vehicle finance in Australia is a great option for businesses looking to invest in a fleet of vehicles. With a range of finance options available, businesses can find the one that best suits their needs and budget. Whether it’s a chattel mortgage, finance lease, hire purchase or operating lease, commercial vehicle finance can help businesses manage their cash flow, improve their credit rating and ultimately grow their business.
