Business Vehicle Finance Options – the benefits and suitability explained.

Business Vehicle Finance Options – the benefits and suitability explained.

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Business Vehicle Finance Options – the benefits and suitability explained.

Whether for your own use, or for the use for your business, there are lots of vehicle finance options available – each with their own benefits – which can sometimes make it confusing, leading to poor choices in the longer term.

In this two-part article we will look at the different personal and business vehicle finance options available. We will put them into simple terms and explain the benefits for each – and the things to be mindful of too.

In today’s article, we will look at the different finance options for business vehicles.

Business Vehicle Finance Options available

When it comes to using cars and vans for your business, there are several options available to you.

Here we look at 5 of the main options and some of the commonly asked questions around these types of finance options.

1.   Hire Purchase

What is Hire Purchase?

Normally, Hire Purchase is the first option most businesses go for. It is a cost-effective way of acquiring a new or used vehicle by making agreed instalment payments after making a down payment usually between 10-50%.

Would I own the vehicle?

Yes, but you only take over ownership of the vehicle upon completion of the agreement.

When should Hire Purchase be considered?

Hire Purchase is a great idea if you are looking to keep a vehicle long term or need to make specialist conversions to the vehicle.

What are the main benefits of Hire Purchase Agreements?

· Can be registered in the company name

· It can appear on the balance sheet

· Monthly payments not subject to VAT

· No Mileage Restrictions

When might a Hire Purchase Agreement not be suitable?

Hire Purchase agreements mean you cannot sell or dispose of the vehicle until the payments are completed. You also cannot hand the vehicle back once payments are completed.

What are my obligations in looking after the vehicle?

Although you aren’t returning the vehicle, you need to make sure the vehicle is properly maintained and looked after. This means;

· The vehicle has comprehensive insurance in place at all times.

· The vehicle has to be serviced and maintained in accordance with the manufacturers warranty.

· Failure to make payments could see the vehicles repossessed.

2.   Lease Purchase

What is a Lease Purchase Agreement?

A Lease Purchase (LP) is very similar to a Hire Purchase agreement. The only real difference is that there is often a larger final payment (also known as a “Balloon” payment) which can provide lower monthly payments. However you need to be aware that this could give you a negative equity problem at the end of the contract.

Would I own the vehicle?

Yes, but only upon completion of all the payments.

When could a Lease Purchase option be considered?

Again, if you are looking to keep a vehicle for a long time, or wanting to incorporate specialist conversions.

What are the main benefits of Lease Purchase Agreements?

· No mileage restriction

· Fixed monthly payments not subject to VAT

· Vehicle is registered in company name

· Initial payment/ deposit is smaller due to some being deferred until the end of the agreement

What else do I need to consider with Lease Purchase Agreements?

Like with Hire Purchase options, with a Lease Purchase, the vehicle has to be insured and has to be serviced and maintained.

Again, you must keep up with payments, and if any are missed the vehicle could be repossessed.

3.   Outright Purchase

What are the benefits of purchasing a vehicle outright?

You could of course by a vehicle outright in full with one payment and there are benefits in doing this as a business.

The main benefit is that your business owns the car and so you can sell it if it is no longer required – recouping some of that initial outlay.

You can also cut out paying interest on the vehicle that you would pay in monthly instalments.

You are also not tied down to mileage restrictions or meeting conditions in the vehicles maintenance – although maintaining and servicing your vehicles is obviously a wise-move.

What are the disadvantages of purchasing a vehicle outright?

The obvious disadvantage is the initial outlay – especially if you need a few vehicles and the unknown value of depreciation.

Then there are the running costs and overall responsibility of the vehicle in terms of maintenance and repairs.

If you are purchasing a vehicle outright, then you need to make sure that it is for a long-term purchase.

(NB on certain cars and with all Light Commercial Vehicles (LCV) when using any type of purchase you can claim capital allowance 100% 1st year allowance. We will be exploring this further in future articles looking financial options and tax.)

4.   Finance Lease

What are they?

Finance Lease is a fixed term rental agreement often used for light commercial vehicles (LCVs).

Would I own the vehicle?

No. The vehicle remains the property of the finance company and you have use of the vehicle.

Is there an initial fee?

Yes – followed by monthly instalments and sometimes a larger final payment.

What are the main benefits of Finance Lease?

There are lots of benefits to a Finance Lease option. The main benefits include;

· A low initial outlay and monthly instalments makes it a good option if you need to get multiple vehicles at the same time.

· Optional larger final payment (Balloon Payment) to reduce monthly payments

· Options of 2-5 years

·  Potential to share in any resale value of the vehicle

·  VAT on the rental is reclaimable 100% if LCV and 50% if Car

What are the disadvantages of Finance Lease?

You are responsible to pay any negative equity that may occur.

What else do I need to consider?

Like the other options, you are responsible for making sure the car is fully insured, maintained and serviced.

If you do not keep up with instalments the vehicle can be repossessed by the finance company.

Something else to consider is something called a peppercorn rental. This is normally a payment which equates to the cost of one monthly payment. Making this payment allows you to keep the vehicle for one more year. After that, you can either pay another peppercorn rental or pay the final balloon rental.

What Next?

If you have any questions about which financial options would be best for your business, then our experts are on-hand to help you find the best way forward. You can message us using the form below, or feel free to add a comment at the bottom of this page.

In the next part of this article we will look at Personal Contract Hire – and what options are available for personal vehicle use.

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Could Flexible Rental Solutions help you make the switch to Electric Vehicles?

Could Flexible Rental Solutions help you make the switch to Electric Vehicles?

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Could Flexible Rental Solutions help you make the switch to Electric Vehicles?

Flexible Rental Option could open the door to electric vehicles.

For many businesses looking to make the switch to electric vehicles, there is a large element of “the unknown” creating some hesitancy. However, with flexible rental solutions there could be a real viable answer for many.

What is Flexible Rental?

Flexible Rental solutions provide a wide range of short-term funding options for a minimum of 3 months.

These short-term funding options have 3 main benefits if you are looking to “test the water” with a particular vehicle.

The main plus points of Flexible Rental solutions are that there is;

  • No upfront fee/payment
  • No long contract (minimum of 3 months)
  • A flat monthly fee.

As well as being provided with a maintenance package looking after tyres, maintenance and breakdown included as standard – with no hidden costs – you have added peace of mind.

Things to consider for electric vehicles

With the switch to electric vehicles particularly offering up so many “unknowns” for some business, Flexible Rental packages could be a great way to test the water.

There are things you will need to consider though.

If you are looking to try out electric vehicles then one of the main considerations how the vehicles are charged.

If you do not have your own charge point at the moment, you could rely on public charging points for the short-term. You can find a list of public charging points on lots of websites and apps such as Zap-Map.

It also worth bearing in mind though – that the switch to electric vehicles is inevitable. Having your own in-house charging solution is something to consider and factor in when you do make the switch.

Find out more about Flexible Rental Options

Flexible Rental solutions can help with a wide range of short-term financial circumstances – and not just for “trying out” electric vehicles.

If you have any questions about the Flexible Rental options available, or which vehicles are available and best suited to your needs, please feel free to get in touch using the form below, or leave a comment at the bottom of this post.

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Peugeot e-Partner – a real viable electric van option

Peugeot e-Partner – a real viable electric van option

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Peugeot e-Partner – a real viable electric van option

Second Peugeot e-Van to be available later this year.

Peugeot is adding a second electric van to its range with the introduction of the new e-Partner later this year. 

Peugeot vans are always popular and considered a safe bet. But for businesses looking to switch to electric vans, what are the main things you need to know?

Who is it ideal for?

The manufacturers say the van offers a 171-mile range from its 50kWh battery pack, this van will be ideal for those businesses who operate on a local and slightly wider regional basis.

There is something to be mindful of when looking at the range of the vehicles. The weather and the load can impact on the maximum range. 

How quickly can it be charged?

The e-Partner will be available with two types of on-board chargers, a 7.4kW single-phase charger as standard and an optional 11kW three-phase charger. It can achieve full power in as little as five hours through an 11kW Wall Box, or an 80% charge in just 30 minutes via a 100kW DC rapid charger.

Are there different driving modes?

There are 3 driving modes which can alter the maximum power output of the motor. These can be used to help achieve the maximum range and also be used to consider the load being carried.

How many people can it hold?

As well as the traditional 3 seats, a Crew Van version will also be available allowing for transportation of up to 5 occupants.

What can it carry?

The e-Partner has a maximum load capacity as the diesel variants (up to 4.4 cubic metres). It also features a maximum payload of up to 800Kg, and towing capacity up to 750kg.

There will also be 2 wheelbase versions available, with a ‘Standard’ variant at 4.4m and ‘Long’ with 4.75m.

What storage options will be available?

There is a Multi-flex modular folding three-seater bench increasing load space up to 500 litres inside the cabin, with storage space under the centre seat cushion and a load-through bulkhead.

In Summary

This van will be a real popular option – and with the Government “Plug-in Van Grants available upto £8000 or 20% of the vehicle RRP – for many businesses operating local delivery services, I believe this could be a real viable option.

To find out more about this van – or any other electric van – please don’t hesitate to get in touch.

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Pandemic Forces Surge in Demands for Home Delivery

Pandemic Forces Surge in Demands for Home Delivery

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Pandemic Forces Surge in Demands for Home Delivery

Businesses forced to meet home delivery demands could be spending more time & money than they need to.

The demand for home delivery is one of the main changes in lifestyle brought on by the Covid-19 pandemic. Whether it’s the weekly shop, buying clothes, or getting your meals from your favourite restaurant, businesses are having to adapt to accommodate home delivery.

According to the ONS (Office for National Statistics) – in December, online food sales were up 126.4%. Online sales in general were up 61.4%. And with this increase in demand from the consumer, businesses have been forced into looking into meeting this demand.

Meeting the demand

Many businesses during the first lockdown looked at short-term approaches – from rental agreements to short-term lease options – in the hope that things “will return to normal soon”.

This hasn’t happened though and as time has gone on and with more lockdowns coming into play, a short-term strategy could need re-visiting.

For businesses who committed to longer-term planning from the off, when you make huge operational changes very quickly, there are often gaps that need plugging.

It may only now becoming apparent how things costs and time could be saved.

Many businesses won’t actually be aware of what is available to them if decisions were made in haste.

Understandably, the focus was just purely on meeting the demand at the time.

The next problem then is having the time to sit down and assess the options whilst it remains so busy.

Working with a third party

Working with a third party who can assess your circumstances and find you the best fit for your needs makes complete sense.

Whether your business is expanding its current fleet and you’re having to manage that – or has had to set-up a fleet of vehicles from scratch – or find a solution – to meet the demand, having someone independent cast their eyes over your situation could save you lots of time and money.

There are so many things to consider.

What vans are best for your delivery needs?

What is the best financing options for your business?

Where can the best deals be found on the vehicles? What additional costs are there?

And then there is the maintenance packages and tracking of the vehicles to make sure the operation runs a smoothly as possible.

For any business having to adapt – drawing on someone with the experience and the contacts to make these worries disappear right away could be the best decision you make.

Comments

Has your business had to adapt? Have you had any issues or would you like to ask any questions of our experts? Please leave your comments at the foot of this page, or message us directly using the form below for more information.

 

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Clean Air Zones – Where they will be and what it means for your business?

Clean Air Zones – Where they will be and what it means for your business?

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Clean Air Zones – Where they will be and what it means for your business?

Clean Air Zones – What they are and how they will affect your business.

You may have seen the acronym CAZ being bandied about in relation to vehicles – and wondering what the fuss is. Or – you may know that CAZ stands for “Clean Air Zone” but are still wondering what it means for you.

Well now we can help you understand a little more where the Clean Air Zones will be, and what it means for your business.

What is a Clean Air Zone?

Clean Air Zone’s are designated areas which have been targeted for improvement in air quality. These are made up of well populated towns and cities in the UK – and even single stretches of heavily-trafficked roads.

In terms of how these zones will “clean up the air” – there is a daily levy which will come into play for certain vehicles being used in these designated areas. The levies will be payable by vehicles which do not meet the emission standards required to be exempt.

You can check if your vehicles are exempt or not on the Gov.uk website. This is a particularly useful tool if you have a fleet of vehicles as you can create an account and upload your vehicles using a .csv spreadsheet to check multiple vehicles at once.

Where are the Clean Air Zones?

The first Clean Air Zone is in Bath – no pun on getting clean! It comes into effect on the 15th March this year. Next up will be Birmingham – on 1st June.

To see more about the areas which are going to be introducing the Clean Air Zones then there is a map with more information on each area on the BVRLA website.

The rest of the Clean Air Zones will be phased in over the next 12-18 months.

In addition to this, the ULEZ (Ultra Low Emission Zone) in London is also due to be expanded in the Autumn this year.

What this means for your business?

If your vehicles are frequently in – or passing through – the Clean Air Zone areas and your vehicles don’t meet the emissions criteria to be exempt, then the most obvious implication is cost.

In terms of what it costs, rather than having one flat fee across the board, it will vary slightly in each area.

There is a reason for this.

The cost of implementing the scheme will vary from area to area due to it’s size, populace and other factors influencing the running cost. However, local authorities are only allowed to charge enough to cover the costs of running the scheme in their area and it is not to be used for making money.

What are the Clean Zone Area charges?

Typical daily charges are around £8-10 for any non-compliant cars, taxis and vans – whilst HGV and buses could be paying as much as £50 a day (based on Birmingham’s plans) – whilst London is £12 for cars and vans.

Obviously, the cost to your business will depend on how many vehicles you have and how many journeys you make into Clean Air Zone areas. The fact is you could be looking at quite substantial additional amounts to be paying out for the same things you are doing now.

If you have 10 cars or vans each paying an average of £9 a day for say 200 days a year it would be £18000 a year extra.

There is also a fine of £120 for not paying – and the zones will be monitored by cameras.

Other considerations affecting planning

As well as varying costs, there are also differing restrictions in each area.

Some areas will apply their Clean Air Zone between certain times (e.g. 7am-7pm). Some areas won’t charge private cars (as proposed in Newcastle).

There are some areas that will not have a Clean Air Zone, but will instead issue fines for excessive idling – as proposed in St. Albans.

Other areas are looking at banning diesel cars and vans altogether.

This could make planning your journeys and managing costs a bit of a minefield.

In Conclusion

There is a lot to take on board with the introduction of the Clean Air Zone area changes.

The variations in restrictions and charges could make it complicated to manage, particularly if you have a mixture of vehicles travelling to different areas.

The options for businesses are quite clear. Either switching to vehicles which are exempt from the charges and restrictions – or ensuring you are on top of the restrictions and charges being brought in as they are introduced. This means planning journeys, costs and accounting for the restrictions to be put in place.

If you would like the latest updates in relation to Clean air Zones then or have any questions relating to your particular circumstances, then please use the form below to get in touch – or leave a comment below (…at the bottom of the page on the blog).

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