What is truck finance?
Truck finance in the UK is similar to several other types of business loans. It involves the owner of the business or the operator who seeks a loan on the truck by keeping that vehicle as collateral. In such a situation, the loan provider reserves the right to repossess the truck if the loan is not cleared.
Are you in a dilemma deciding between buying and leasing a truck? You can opt for the most conventional choices that hold with buying. However, it means you have to pay upfront. The second option offers more viability by allowing you to get truck finance deals through lease or any other way.
The best thing about this option is that it will not hamper the consistency of the business cash flow. It lets you pay in a manageable way by spreading out the cost evenly over a few months. Leasing an HGV does not mean you cannot own it. This option is also open to you.
Most of the deals to finance trucks come under asset finance. It has a direct relation with the truck suitable for your business. For this reason, defaulting on payment will allow the lender to claim vehicle ownership.
Here, this truck will act as a security to help you get financial aid in return. We know sourcing the best deal takes a lot of work. Thus, we have created a system to maximise the opportunities of getting the best offer. You need not have to settle with the first deal that appears before your eyes.
What is needed to get truck finance?
You may need any sort of commercial truck, including a pick-up truck on finance. If you are unaware of the basics of it, then you may be at risk. Therefore, as the financial companion of your company, we will guide you while preparing for this vehicle finance.
The terms and conditions will vary from lender to lender. Still, our analysis says that most truck finance providers look for these 3 factors to finance trucks for the indulging businesses, particularly the smaller ones:
Whether you opt for unsecured business loans or secured ones like truck finance, you should know that credit scores do matter a lot. A good credit score is always vital to keep open the borrowing chances. You not only get a large amount to obtain but also for a longer duration, providing much financial stability to your company. On the other hand, a poor credit score creates a lot of problems, mainly if you apply from a bank.
It is correct that you chose your truck as the asset to secure a loan deal. Still, you should understand the criteria that lenders impose when it comes to loan collateral. They tend to check the quality and truck condition before finalising any deal. Trucks that are in better condition hold better value as loan collateral. If you do so, then you have an excellent chance to get an affordable finance deal.
New businesses are always under the shadow of doubts for most of the truck finance providers in the UK. They think financing those businesses would be a huge risk as they have not yet spent too much time in the business world. On the other hand, established businesses deserve a better chance with better rates on truck finance in the UK. They may get a deal with lower interest rates, assuming they have more profitable returns than new companies.
These factors also play a crucial role when you want to purchase an electric pick-up truck. Are electric pickup trucks coming to the UK market? They may not be in primary use, but many benefits will come when you seek finance.
How to buy a truck with asset finance?
As truck finance brokers, our forte is to take care of various businesses with different needs and contribute a lot in the growth of their capital. When it comes to finance a truck, you can expect to see a collection of several choices with different terms and conditions. However, we want to make the procedure for final selection less fussy for you.
Here is a simple trick to remember. It is to validate the business’s cash flow, budget and finance terms and conditions while running through the different options on truck asset finance like:
Hire purchase or lease purchase
It facilities your business to lease a truck based on a specific amount and defined time duration. Purchasing the truck is always an option once the contract ends. You are free to use the vehicle fully throughout the term, while gaining ownership is only possible after successful payment. In the case of a lease purchase which is almost like it, you can make a larger balloon payment at the end instead of following a monthly repayment pattern.
This option provides the best way to handle depreciation losses. Repayments will take the shape of the minimum figure the future value of the truck would hold. The estimation does not coincide with the initial value of the vehicle. Besides, you get the liberty to buy or return the vehicle on completion of the final payment. Make sure to read the agreement or contract before taking the plunge.
You can use this option to rent the truck. However, you can also use the truck for a specified duration by paying something every month. Once the term is over, you can disburse a lump sum amount to the lender to buy the truck upfront. You can even ask for a new vehicle or an extension of the leasing period. This truck finance option lets you avail a fresh truck and not worry about the servicing and maintenance costs. In addition, it permits easy upgradation to newer models in the upcoming years.
You cannot gain ownership at the end of the payment term in case of this option. It is comparatively pricey given the cost you will have to pay along the interest. However, there is a unique feature about every option. Here, you can sell the truck in the name of the leasing company once the term is over. Most importantly, you can hold the maximum portion of the value and enjoy lease extension facility at affordable prices.
This option works around the depreciating value of a business asset like a truck. Here, you can hire the truck for a shorter duration than the time it can actually spend on the road. Owning the vehicle is not possible when you consider this funding option. The leasing company have the freedom to sell or re-lease the truck again once the contract ends with you.
It can be an extended version of the operating lease option. You will get some extra facilities in addition to what you received in the case of the previous one. It is an ideal alternative to prefer if you want to lessen the risk of asset depreciation. Get an offer that could claim to cover the maintenance expenses and other road-related assistance charges. The offer might vary from one leasing firm to another.