BUSINESS CAR FINANCE

Business Car Finance & Growing Your Company

Business car financing might sound complicated, but in practice, it’s a practical solution that can help businesses of all sizes succeed. Purchasing vehicles in this manner is a convenient and flexible way for companies to acquire what they need without affecting their cash flow or tying up valuable capital. Many businesses in the UK have found it essential to stay agile and competitive as the UK’s commercial landscape rapidly evolves.

How does business car finance work? Essentially, it is a financial arrangement that enables businesses to use a car or fleet of cars for their operations without having to pay a substantial upfront payment. In exchange for the use of the car(s), the company agrees to pay regular installments over a certain period of time. Depending on the type of finance chosen, the business may be able to own the vehicle outright at the end of the agreement.

There are many advantages to such a setup. The regular payments help businesses manage their budgets effectively, as they can factor them into their cash flow. Additionally, businesses can afford to purchase vehicles with higher specifications than they could otherwise afford outright. Furthermore, in many cases, the finance company can take over the responsibility for vehicle maintenance, reducing another worry for the business owner.

Whether you need a single reliable car for your sole trader business or an entire fleet for your large enterprise, business car finance is an effective, flexible solution.

UNDERSTANDING BUSINESS CAR FINANCE

Finance for businesses is not a one-size-fits-all industry. A variety of asset finance options are available, all with their own benefits and drawbacks. Here are some options to consider:

• Hire Purchase (HP):  This is a popular and straightforward option. In most cases, the cost of the car is spread out over a period of one to five years. After making all the payments, your business will own the car outright. With this option, you will be able to own the vehicle eventually and make predictable monthly payments.
• Finance Lease (FL): With a finance lease, your business rents the car for an agreed period and makes regular payments. The car can either be rented out again for a secondary fee or sold to a third party at the end of the term. Proceeds from the sale are used to settle the remaining debt. The monthly rental of a finance lease can be deducted from taxable profits, making it a cost-effective option for VAT-registered companies.
• Contract Hire (CH): In essence, this is a long-term rental agreement. A fixed monthly payment is made for the use of the car over an agreed period, and the car is simply returned at the end of the term. An advantage of this option is that it is hassle-free and often includes maintenance and servicing as part of the contract. Businesses that need a car without the responsibilities of ownership can take advantage of this service.
• Lease Purchase (LP): Similar to HP, a lease-purchase agreement lets you pay for the car over time, but with a smaller monthly payment due to a larger final ‘balloon’ payment. When the agreement ends, you can either make the balloon payment to own the car, or part-exchange it for a new one.

Different needs and circumstances dictate which option is best for you. The first step to making an informed decision on business car finance is to understand what each type offers.

THE PROCESS OF SECURING BUSINESS CAR FINANCE

If broken down into manageable steps, securing business car finance is actually quite straightforward. To guide you through the business car finance process, here are some steps:

1. Assess your business needs: Before you can do anything else, you must understand your business requirements. Determine the type and number of cars you need, their purpose, and your monthly payment budget.
2. Choose the right finance option: There are several types of car credit options, as discussed in the previous section. Decide which option best suits your business needs and financial situation.
3. Find a reputable broker or lender: Look for a reputable and trustworthy finance broker or lender. By using their services, you will be guided through the process, understand the details, and receive the best deal possible.
4. Application: After you’ve selected a lender or broker, you’ll need to complete an application. Financial statements, business plans, and proof of identification are usually required.
5. Approval: An assessment of your business’s financial health and credit checks will be conducted by the lender. In most cases, they will approve your application and provide a finance agreement if everything is in order.
6. Sign the agreement: Make sure you read the agreement carefully. Be sure you understand all the terms, including the monthly payment, interest rate, and what happens at the end. The agreement should be signed once you are satisfied.
7. Take delivery of the car: The car or cars will be delivered once the agreement is signed and the dealer has been paid. You’ll then begin making the agreed-upon monthly payments, usually starting one month later.

You should remember that every business is unique and that the exact process may differ slightly depending on the lender and the type of financing.

Factors To Consider When Choosing Business Car Finance

When it comes to business car financing, there are more factors to consider than just picking an option that offers affordable monthly repayments. It’s crucial to take into account a variety of factors that may affect your business in the long term. Consider these key factors:

• Interest Rates: The interest rate you pay each month will have a significant effect on how much you’ll pay over the life of the contract. Finding the best rate means lower costs, so it pays to shop around.
• Repayment Terms: It is possible to repay the loan over a period of several months to several years. You’ll pay less in interest over the course of a longer term, but you’ll also pay lower monthly payments.
• Balloon Payments: In some finance options, like Lease Purchase, a balloon payment may be required at the end of the term. As a result, the monthly payments can be more affordable, but you should ensure your business can afford the balloon payment when it is due.
• Depreciation: Depreciation occurs over time in most cars. Consider how much you will be able to get for the car at the end of your agreement if you plan on owning it. You won’t have to worry about depreciation if you lease, but the cost could increase.
• Mileage Limits: There are mileage limits in some finance agreements, especially contract hire agreements. Extra charges may apply if you exceed these.
• Maintenance and Repairs: It is important to check if the agreement covers maintenance and repairs. If not, you’ll need to budget for them.

Considering these factors can help you choose a business car finance option that meets your current needs while also supporting your long-term goals.

Diverse Range of Cars We Finance at First Oak Capital

Catering to Every Business Requirement: From Electric to Exotic

At First Oak Capital, we understand that the needs of businesses when it comes to vehicles are as varied as the businesses themselves. Our car finance solutions are designed to be as diverse and adaptable as the range of vehicles we finance. From the latest in eco-friendly technology to the timeless charm of classic cars, we provide financing options for a wide array of vehicles.

Electric Cars:  We offer finance options for a variety of electric vehicles, catering to businesses looking to reduce their carbon footprint while enjoying the tax benefits associated with EVs.

Hybrid Vehicles: Hybrid cars, which combine petrol or diesel engines with electric power, are also part of our financing portfolio, offering an efficient transition towards greener technology.

Taxis: We finance taxis, understanding their critical role in urban transport and the specific needs of businesses in this sector.

Supercars and Sports Cars: For businesses seeking to make a statement, we offer finance options for high-performance supercars and sports cars, aligning with the image and prestige they wish to project.

Classic Cars:  Our finance solutions extend to classic cars, catering to enthusiasts and businesses looking to invest in vehicles with enduring value and appeal.

Motorhomes and Campervans: Recognising the growing trend towards mobile business solutions and leisure, we provide financing for motorhomes and campervans, offering both comfort and functionality.

Each type of vehicle comes with its unique set of benefits and considerations. At First Oak Capital, we pride ourselves on understanding these nuances and offering bespoke finance solutions that align with your business goals and the specific vehicle you wish to acquire. Whether it’s promoting an eco-friendly image with an electric car, making a bold statement with a supercar, or investing in a classic car for its enduring value, we are here to make your aspirations a reality.

Comparative Analysis: Buying vs Leasing a Car

Many companies have to choose between buying a car outright or opting for a financing option when acquiring a car for their business. There are merits and drawbacks to both routes. In order to compare the two approaches, let’s consider:

• Upfront Cost: In order to purchase a car, a business must make a substantial upfront payment, which can negatively impact their cash flow. A car loan, on the other hand, often requires just a few months’ worth of payments at the beginning.

• Cash Flow and Budgeting: With car finance, the cost is spread over an extended period, making monthly payments predictable and easy to budget. In the long run, buying outright can offer long-term savings, but the initial investment is substantial.

• Ownership: You own a car outright when you buy it and can use it or modify it however you wish. Unless you opt for a hire purchase or make your final balloon payment on a lease, you do not own the vehicle with most types of car finance. As a result, you’ll have to follow the terms of the agreement, including mileage and modification restrictions.

• Maintenance and Depreciation: When you own a car, you’ll be responsible for maintenance costs and depreciation. Several types of car finance include maintenance, and contract hire doesn’t require you to worry about depreciation when you return the vehicle.

• Flexibility: It is possible to have greater flexibility with car financing. The lease term can be extended or shortened to fit your business needs if they change. A car you own must be sold or part-exchanged if you want a new one.

The decision between buying and leasing a van will depend on the specific needs, financial situation, and long-term goals of your business. Before making a decision, it’s important to consider all aspects.

Why Choose First Oak Capital To Help?

Among UK finance brokers, First Oak Capital stands out for providing the best and most competitive business car finance. What makes us the right choice for you?

• Expertise: Our team at First Oak Capital has over 60 years of combined experience and deep expertise in business finance. Since we understand how business car financing works, we can help you make informed decisions every step of the way.
• Tailored Solutions: Every business is unique. This is why we offer tailored finance solutions to meet your individual needs. No matter if you’re a sole trader looking for a single car or a large company with a fleet, we can help you find the right finance plan.
• Access to a Wide Range of Lenders: As a broker, we have access to a variety of lenders, allowing us to provide the most competitive deals. Save time and effort by letting us do the legwork for you.
• Transparent and Honest Service: Transparency and honesty are important to us. We’ll explain everything clearly, without jargon, so you know exactly what you’re getting. Just straightforward, professional service with no hidden fees.
• Dedicated Support: We are committed to providing excellent customer service. From your first enquiry to the delivery of your vehicle, we are here to help.

Here at First Oak Capital, we’re more than just finance brokers. We’re a trusted business partner who helps your business thrive. So if you are thinking about business car financing, contact us today. With our help, you’ll find the perfect deal for your business, so it can continue to suceed and grow.