At Shore Asset Finance, we regularly arrange finance for new and used commercial vehicles. Through our qualified experience and an established lending panel, we help businesses make informed decisions about how to purchase their next vehicle.
A company vehicle is a great form of advertising for your business – If your old set of wheels is looking tired and neglected, then investing in a new vehicle for your business can improve reputation and increase awareness of your business. Vehicle finance can help you to improve the quality of vehicle your business is able to purchase and the longevity of the vehicle within your business.
We have included below some useful guidance when looking for your next commercial vehicle and considering finance
Eligibility
3 things to look out for are:-
- Vehicles supplied by a reputable supplier of good standing and a positive reputation offer the widest range of available lenders
- Less than 100,000 miles at the time of purchase preferred
- No insurance write-off recorded vehicles
Budgeting
Spreading the cost for up to 5 years, can help a business meet the earning potential of the vehicle and future budget requirements
An optional balloon payment is a common way of minimizing a monthly payment whilst taking advantage of the future value of the vehicle. The lender will consider annual mileage and industry to determine a balloon payment for the finance agreement
Most finance agreements are a fixed interest rate which provides certainty of the monthly payment for the entire finance period
VAT
Hire Purchase , a VAT-registered business can reclaim the VAT in full in the same period that they purchase the vehicle.
VAT Deferrals are a useful tool to reclaim VAT from HMRC before paying to the lender up to 4 months later. Giving time to process the VAT reclaim and removing cashflow pressure
Using a Finance Lease – The lender will pay the supplier in full, with the VAT becoming payable on a monthly basis, reducing large upfront cost
VAT reclaimable determined by your VAT registration status. Speak to your trusted tax adviser for more information
Ownership
Hire purchase , the business can own the vehicle on their final payment, with their option to purchase fee collected automatically
Finance lease allows sole use of the vehicle during the finance term, with the ability to benefit from the sale proceeds at the end of the finance period
Tax
The Annual Investment Allowance (AIA) is currently £1m. You can deduct the full value of a vehicle that qualifies for the AIA from your profits before tax. The finance product that allows you to take full advantage of this allowance is Hire Purchase
Alternatively, leasing payments are 100% deductible against your future profits within the financial year that they are repaid
Interested in finding out more?
At Shore we get to know your business and find solutions for your unique business needs
If you want to explore the finance solutions suited to your business, please get in touch
Check out how we recently assisted a company with their vehicle purchase here
