By Mark Hilton, LCV Sales Manager, Allports Group
Britain’s cost of living crisis continues to affect many businesses with operating costs yet to start coming down. Purchasing a new commercial vehicle is a big financial commitment in normal trading circumstances, and even more so at times like those we find ourselves in currently, particularly for small businesses.
So with over 60 years experience in the commercial vehicle sales sector, Allports Group are well placed to offer advice and guidance to KBB installation businesses considering buying a new van or commercial vehicle.
There are effectively two main types of finance agreement – Hire Purchase and Finance Lease – and both come with advantages and disadvantages, depending on your situation and needs.
Hire Purchase is a popular finance option that allows businesses to acquire assets without a large upfront payment. Here are some of its advantages and disadvantages:
Spread Costs: With Hire Purchase, you can spread the cost of the asset over an agreed-upon period, making it easier to manage your budget.
Ownership: Once all payments are made, you gain full ownership of the asset, giving you the freedom to use and modify it as needed.
Fixed Interest Rates: Hire Purchase typically comes with fixed interest rates, protecting you from fluctuations in interest rates.
Initial Deposit: A deposit is usually required at the beginning of the agreement, which can be a significant upfront cost.
Repossession Risk: If you miss payments, the asset may be at risk of repossession, impacting your business operations.
Finance Lease is another finance option that offers some unique benefits, but it operates differently from Hire Purchase. Here’s an overview of its advantages and disadvantages:
Lower Payments: Compared to Hire Purchase, monthly payments under a Finance Lease are typically lower, freeing up capital for other business needs.
Flexible Terms: Finance Lease allows for flexible lease terms, enabling you to match the lease duration with the useful life of the asset.
Maintenance Options: Depending on the agreement, maintenance costs may be included in the lease, simplifying fleet management.
No Ownership: Unlike Hire Purchase, you don’t own the asset at the end of the lease term. However, you may have the option to extend the lease or upgrade to a newer asset.
Additional Costs: You may incur additional charges for excess wear and tear or mileage, depending on the lease terms.
For more information on the decision making process of funding a new commercial vehicle, Allports are on hand – simply contact the LCV Specialists on 01543 420120, or visit our website www.allportsgroup.co.uk
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