When thinking of options of financing the purchase of your new car or fleet of vehicles for your business, having a reasonable credit score and a cash deposit can suffice to satisfy most automotive dealers. However, the available options can prove overwhelming. You are tasked with choosing what suits your business needs. As such, mistakes can be made and they can become a costly headache going forward.
When deciding which cars to buy, your considerations should be based on the purpose of the vehicles and how to finance their acquisition. For instance, if you want something reliable for a limited period, then consider leasing the cars. If you want something smart and executive for personal use, the best thing is to get one via a personal contract instead of your business. opt to lease one or buy it under hire-purchase terms. For a standard mid-range vehicle for the company, then a hire-purchase deal will be an ideal option.
Your next step will be figuring out your means of paying for the vehicles. If you are not able to make any up-front payments, then a monthly repayment arrangement will be an ideal option. In most cases, you are expected to deposit roughly 10% of the value of the vehicle you wish to purchase, but this could be higher if you have a poor credit record, or your business started recently. If you can pay a significant amount of the asking price, this could help lower the repayments. You, however, must be sure of your cash flow situation, and if it can sustain the short-term expense. A hire-purchase deal is a good option if you are thinking of getting something for regular use with a payment plan that involves predictable instalments.
What Finance Options Are Available?
The payment plans you go for depends on whether you are thinking of owning a fleet or a car for your business given the available options to choose from.
If you intend to own the cars, then go for a hire-purchase arrangement that allows you to make your payments in instalments. The costs you will incur are calculated based on the price of the vehicle, the probable interest, and any additional charges for administration. Keep in mind, that the liability you take on with the hire-purchase plan might impact your chances of borrowing, but this depends on how large of a liability you shoulder.
On the flip side, a leased vehicle would be an ideal option if you are not ready to own the car. Under this plan, you can write off the entire costs of the vehicle as an expense. It also saves you tax while. However, you will be obligated to make monthly payments during the lease’s tenure, and you might be eligible to get a share of the proceeds when the car is sold. That is why you should go through the contract and fully understand the terms and conditions of the deal.
You can as well opt for an operating lease or contract hire that includes the monthly expenses of servicing and maintenance of the vehicle. It is an option worth taking if you do not like unpleasant surprises. You, nonetheless, should comb through the agreement to know what damage is covered and which kind is excluded, and whether there are provisions for additional services such as getting a replacement when the car is scheduled for service.
Where Can I purchase The Vehicle?
Once you know the type of car you need and the financial arrangements to work with, the next thing is to find out where to acquire the vehicle.
You can consider getting what you want directly from the manufacturer. It is an ideal option if you are thinking of buying a fleet of vehicles for your company. You can lessen the complexities involved if you join a group buying service which can also see you land a considerable discount for a bulk purchase.
Conversely, you can go to a certified dealer even if you are thinking of getting second-hand cars. Purchasing used vehicles from a private dealer can be a cheap option; however, few finance companies will approve the purchase. Many turn this down because the buyer shoulders significant risk.
How Do I Choose The Best Automobile Dealer?
Convenience, the dealer’s standing, and the cost are all essential factors to consider when you decide to buy your vehicle from a car dealership. If the seller has a car finance plan to go with the car, you should review the terms and conditions so that you understand what you getting yourself into before you sign. Do your homework; research and compare prices between all potential car dealerships. Furthermore, trying to figure out what you will be paying as instalments and if it is a sustainable amount given your current financial situation.
If the dealer offers a hire-purchase plan, you should review the interest rate. And if you are purchasing a car for your business, and it is a limited company, then you might be required to provide an APR. be cautious of any dealership that does not insist on this. Remember to request a few quotes from different dealers so that you can compare their prices and pick the ones with the best deal. Never shy away from bargaining; it always is an option that you can leverage.
As you make plans to buy, take the time to consider what next if something goes wrong with the vehicle. Where would you take it for servicing and what would be the costs? Lastly, do some research on the dealership to find out what others that have used them have to say.
When Should I Consider A Fleet Management Company?
If your business will need a fleet of vehicles, managing them will prove to be a challenge. That is why you should consider purchasing cars from a reputable fleet management firm. If might seem like an expensive route to take, but the benefits might outweigh the costs in the long-term.
The fleet management company is ideal for a large business that requires nearly 100 or more cars. The deal is often one that runs for three to five years, and you should go through the contract to ensure that the terms and conditions include reasonable break clauses that will allow you to pull out if you find the services rendered are not up to scratch.
The fleet management companies offer a wide array of services, including analysis of the efficiency and capacity of your fleet, arranging for maintenance and repair services, scrutinizing fuel usage, drawing up a replacement policy, handling accidents, selling the old cars, sourcing new vehicles and arranging for their finance.
For a small business, it is better to consider contract-hire arrangements that can provide similar services and terms as a fleet management company.
Which Steps Should I Take When Things Go Wrong?
You might think that the vehicle will be the property of the finance provider as per the arrangements until the last payment is made; thus, you also will expect the finance provider to handle any problems that may arise. However, this is not the case most of the time. Therefore, you will have to deal with any issues with the car that might come up.
If the vehicle is faulty or damaged, the dealer should be the one to replace or repair it, which is why you must request for the warranty. Given this, do not work with shady dealerships. If your company is an unincorporated enterprise, you might secure some money that will help your business take on some of the responsibilities as stipulated by the Consumer Credit Act.
Keep in mind that signing up for a finance arrangement means that you are committing to a binding contract. As a result, there is nothing much you can do if you later find that the vehicle is not what you expected. You should be insured and inform your insurer about the car and who the designated driver is in case of an accident.
Defaulting on the repayments for the loan will force the finance company to take some unpleasant actions, which might include confiscating the vehicle, depending on the agreed terms and conditions. However, you might be able to come to a favourable arrangement if you are close to paying off the car.
