We all know that for some, a vehicle is a key part of their business. Whether you provide services in the field, or straight from your vehicle itself, you want it to be set up in the right way for you, and on the road as soon as possible, not costing you money in repairs. Buying a van outright is a large capital outlay, and if you don’t have the available cash, it’s just not an option. So, for many financing can be an affordable option, and with different products available you can really tailor what you need to your budget and requirements. At the same time, it also can be a minefield when it comes to working out what’s best for you.
Financing is a really popular way of running a vehicle for many businesses. However, before you start applying straight away there are a couple of things to think about. Here at Capital Fleet Solutions, we’ve put together some tips to help inform you about the kinds of things to think about when you apply for a finance product.
It’s important at this stage to note that we always advise speaking to an FCA-registered professional before taking up any finance products. They will be able to answer any questions for you about the types of products available and what may suit you best.
- Budget
This is fundamental to any agreement – don’t enter into anything without properly budgeting the total cost. That’s not just the monthly payments – as there are different lengths and terms to each agreement, so not only do you need to work out what you can afford every month, but also what initial deposit you have available (more on this in the next point). You also need to check what final or ‘balloon’ payments there are. Some agreements also have stipulations on what condition the vehicle should be returned in, so you need to make sure that your business planning allows for any unforeseen additional outgoing costs.
- Deposit
Just as important as budget, it’s worth thinking about what kind of deposit you want to put down. In most cases, the more deposit you put down, the lower the monthly payments. However, in some cases putting down more money at the beginning may not actually be the best thing to do – for cash flow reasons. Either way, if you have an idea of what you want your deposit to be, this will make the process of applying easier. You may want a smaller deposit with higher monthly costs which would fit better with your cash flow projections, especially if you are in a start-up.
- Finance Partner
There are numerous finance brokers out there, so it’s important to choose a partner that has a good reputation and the right experience. As we’ve said above, using an FCA-registered provider is important as they have already met the required standards. If you use Capital Fleet Solutions to do this, we have finance companies we’ve developed relationships with, so we know these providers are professional in their operations. We will also match your circumstances with their criteria to get the best fit for you.
Once you’ve thought through these, there are a couple of other things to note when you come to apply for finance. Firstly, the business will need to go through a credit check as part of the process. Once you’ve filled out the application, the finance provider will check your details, including referring to credit agencies. Other things they will look for include:
- Credit information on the Directors
- When the business started trading
- Financial performance including balance sheet and profit & loss
- Public records – County Court judgements, bankruptcies, insolvency
- Companies House information
So, that’s an introduction to some of the main things to think about and consider as part of the finance application process. We hope this has helped give some idea of what finance companies will be looking for, and how you can help get a step ahead in terms of financial planning before taking up an agreement.
As always, we’re here if you want to discuss further – 01329 756 373 / www.capitalfleet.co.uk.
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