Deciding on the correct way to buy a vehicle for your chauffeur fleet can be a tricky decision.
Our owner Chris Brown clears-up the most common questions he is asked in regards to funding…
1. What are the lengths of terms I can expect to be offered?
The lending periods are typically between two and five years depending on the age of the vehicle. A way to keep your monthly payments down is to go for a loan with a balloon structure – this way, you pay less each month with a lump sum payment due at the end of the agreement.
2. Do I have to pay a large deposit?
Not necessarily, many funders will accept low deposits. You should aim to get a deposit together though, as it will strengthen your application, reduce your loan amount and therefore reduce the overall interest charged.
3. How much interest should I expect to pay and what happens if I want to pay the loan in full before the agreement ends?
Interest rates are usually determined by your credit history, the loan amount required and the terms of payment. Funders will have varying penalties for early repayment so you will need to understand the individual terms and conditions of the funder.
4. What if I’ve had funding declined with the vehicle manufacturer?
Many operators fail to qualify against the stringent checks of some of the vehicle manufacturers’ finance schemes. However, there are numerous finance companies who will look at your circumstances overall, including your monthly expenditure, to determine whether you can meet your loan payments.
5. I have historical adverse credit. Is it still possible to get vehicle finance?
It is most definitely. Finance companies will look at your present circumstances and will more than likely require at least three months’ bank statements. If you are aware you have bad credit, it’s probably worth streamlining your finances and keeping a detailed budget of your spending so you can show that you are able to meet the repayments required. You will likely be charged a higher rate of interest than the high street banks or vehicle manufacturers can offer.
6. What if I’m a new-start business or not in regular employment?
As long as you have evidence that you can repay the monthly loan amount and/or you have sufficient assets to secure the loan then funders will look at your application. This usually means supplying current bank statements. If the risk is great to the lender, you will likely be charged a higher interest rate.
7. I’m up to my limit with current lending, is it possible to obtain further funding?
Various funders offer additional credit lines that can be added to enable you to continue to grow your business.
8. Can I get other asset finance to help my business?
There are numerous other assets that need to be financed in your business such as phone systems, IT, software, office furniture etc. Funding these through a finance company frees up your cash flow to continue to allow your business to run smoothly and gives you the flexibility to deal with any unforeseen issues that may arise.
9. What about Contract Hire facilities?
Contract hire can be a cost effective way of a business or individual wishing to update their cars on a regular basis. Agreements are based on your expected annual mileage and the vehicle is handed back to the finance company at the end of your contract.
10. Should I use a finance broker?
A finance broker, such as Ethos Asset Finance, will undertake the investigative work of searching for a loan or contract hire for you and source you the best deal for your individual circumstances, particularly if you’ve been refused dealer and bank finance, you’re up to your limit with your current lender, or if you have historical adverse credit. They may also have access to some good deals, for example, low deposits, competitive interest rates and favourable terms. Remember, too many finance applications can negatively impact your credit history so using a broker such as Ethos, will reduce that risk.