Although you may have experience buying a personal vehicle
with a finance deal, when using business car finance, there are several
important differences. This means that there are a number of factors to consider
before making a final decision as to which deal is best.
Loan or Hire?
The first consideration of business car finance is whether
you wish to buy or hire a business vehicle. While this choice is fairly simple
when buying a personal vehicle, there are a number of tax considerations and
implications, which will influence your decision. Many businesses prefer hire
finance agreements as this allows for greater tax advantages. Additionally,
this means that the business can enjoy relatively new vehicles all the time.
Hire agreements allow the vehicle to be returned at the end of the hire
agreement and a new agreement to be started. However, some businesses would
like to have their vehicles as an asset on their balance sheet. This means that
a loan is a more beneficial form of business car finance. Australia based
businesses would need to assess the tax implications of each option to
determine the best option.
Secured or Unsecured?
Another factor to consider is whether you choose secured or
unsecured business car finance. Brisbane businesses will need to determine the
advantages and disadvantages associated with these financial products. While
unsecured loans tend to be thought of as simpler, you may find that a secured
loan has more advantageous terms and interest rates. Additionally, you may find
it easier to obtain a secured loan, since the loan provider has the assurance
that should you default, they can repossess the vehicle and recoup the balance
of the loan.
Fixed or Variable Rate?
When you begin to research your business car finance, you may
be unsure whether to choose a product with a fixed or variable rate. Many
business owners tend to prefer a fixed rate, as this ensures that you know
exactly how much you will be paying every month of the loan term. While it is
possible that the base interest rate will drop over time, it may also rise,
which makes managing your business expenses more challenging.
Are the Terms Flexible?
There are many different structures of business finance,
which can be flexible enough to suit your specific circumstances. This could
include delayed payment on the initial payment, interest only payments,
extended finance with balloon payments or no early repayment fees. You will
need to assess the terms and conditions of each loan deal to determine it has
the flexibility needed to suit your circumstances. It can be more advantageous
to choose a loan which has more flexible terms even if it costs you a little
more in the monthly repayments.
If you would like to learn more about business
car finance, contact us. We are a specialist broker with access to a
wide panel of lenders. Our experienced advisors would be happy to discuss your
specific requirements and help you find the deal best suited to your particular
needs. This will help you to move forward with confidence that you have made
the right decision for your business.
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