Best business car finance options

Successful companies today, with big competitions and new market openings, have a great need for improving and expanding their business. Therefore, if a company wants to keep their status, they have to provide fast and quality service, as well as variety of services. Control of these factors, as well as independence from the other companies, are the key to every successful business. Why should you depend on other companies? Why would you consider a possibility of errors and/or latency because of factors that aren’t under the control of your company? Buying business vehicles today is not an option, but a need. 

 

Whether it is just one vehicle or a motor pool, with its benefits it pulls some expenses with it which can be reduced with right moves. These are the best business car finance options.

Car lease

A car lease (finance lease) is the most frequent choice of business car financing. The financier buys the vehicle for the company. The business owner is obliged to pay fixed monthly rental with fixed interest rate. At the end of the lease period the customer (business owner) can either pay the final installment and become the owner of the vehicle, or trade it in or re-finance residual and continue the lease. The benefits of this kind of financing are numerous. Contract is made with highly flexible terms which can vary from one to five years. Monthly lease rental and interest rate are always known in advance, so it offers no surprises at the end of the month. Provided the vehicle is used for business purposes, you will have some tax deduction and very reasonable interest rates because this is a way of secure financing.

Commercial hire purchase

This form of financing does not differ much from a car lease. The business owner makes a commercial hire purchase agreement with the financier about the vehicle. You have the same benefits as in car lease option, such as fixed monthly payments and interest rate. The difference is that at the end of the term you pay the residual value and become the owner of the car. This should be considered if you are sure you want to become owner of the vehicle, because you can’t lease the car after the term ends.

Chattel Mortgage 

  

Chattel mortgage resembles much of a classic car loan. This is a secured way of financing. The financier gives funds to the business owner for buying the vehicle. The business owner then gets the ownership of the vehicle but the financier makes a mortgage over it as a security for their loan. The contract that is made can be flexible from one to five years and, being that the monthly payment and interest rates are fixed, the cost is known in advance. With this kind of car financing you can even turn in a cash deposit up to 50% of the full car value. At the end of the term the charge is removed and you become an owner of the vehicle.

Novated lease

This is a three way agreement between the financier, the business owner and the employee. This way an employee enters the car lease with a financier where the business owner pays his obligations as long as the vehicle is used for company purposes. This is a great way of stimulating your workers. Employees under Novated lease agreement can choose which car they shall buy. If the employee, at any moment during this agreement, leaves the company or the lease agreement is finalized, all obligations by employer revert back to the employee. This way of financing brings numerous benefits to both the employer and the employee. Employer can provide a more attractive remuneration package, and therefore attract the employees they want. They have no residual risk or an excess vehicle if an employee leaves. This kind of financing also cuts down the administration time and costs comparing to business vehicles. As for the employee, he can choose the car he wants to buy; he controls the maintenance and care over the car, and generally has all the other benefits of car lease.

All of these options offer a great deal of advantages, respectively. If you are a business owner, you should check out all of these options before settling for the right one. It all depends on what you need the car for. One thing that is certain is that it is better to pay for your car pool little by little, than all at once, since companies that can provide that amount of cash at once are rare nowadays.