Getting HGV truck finance for business: Is it a good or bad idea?

Your business might demand frequent moving from one destination to another. You have been managing the transport somehow till date. Now, you feel the need to get a heavy goods vehicle for this purpose.It will be a huge step to help your business expand. Your operations will expand. You could spread it to other locations, also. However, your business might not be able to afford the required money outright to purchase the vehicle.You can rely on HGV truck finance to buy this costly vehicle. It is, in fact, a smart decision to use financing for this purpose. Taking out a big chunk from the business cash reserve will disturb usual operations.

Moreover, this funding option has different types of perks to offer. You can even think of covering the truck maintenance cost with it. Such a provision is a boon for businesses that do not facilitate in-house servicing of the vehicle.

As a business owner, you must validate if borrowing would be helpful. It does not make any sense if your business is not able to make some profit out of it at the end of the day. For this reason, you must evaluate the possible impact that this decision can have on your business.

Uncover the different angles of the validation process by flipping through this blog.

Check if getting HGV with finance is beneficial

Your dilemma in utilising a financing option to sponsor the truck purchase is genuine. You are concerned about the potential debt trap it might create for your business. However, the fact is that managing the huge cost of the truck is very difficult.

If you extract the money from your business savings, it will hamper the cash flow. All other works inside the business might come to a halt. Most importantly, you will not be able to avail yourself of the benefits of truck finance. Read them and fix your mind.

Medley of options to suit every purpose

You can exploit a wide variety of options when it comes to financing only. Other alternatives of arranging money for purchase cannot present different options to you. Every arrangement has different features. It ensures providing a wholesome finance option as per your business.

You can select an option that has the backing of your budget. It should not throw any impact on the business’s cash flow. Lastly, the finance term should be according to the financial condition of the business.

The options you can explore are:

Contract purchase: This option will take away your worries regarding the depreciating value of the vehicle. The ultimate ownership is possible once you complete the final payment.

Hire purchase: Buying the HGV is not a convenient choice always. This option facilitates easy leasing of the vehicle for a fixed duration and set amount. There will be no restriction on the use of the truck till the term expires. Becoming the owner is also possible but only after completion of the finance payment.

Finance lease: This option does not lead to ownership. Although you cannot become the owner, you can sell the truck in the name of the leasing company. You can hold the money equal to the present depreciated value of the vehicle.

Operating lease: Your truck is going to be a vital asset for your business. However, its value will depreciate with time. You can use this option to hire a truck for a limited time instead of purchasing it immediately.

Contract hire: This option is a lot like an operating lease. Some of the advantages and features you can avail of from the leasing company make it different. It is also another arrangement that can help you downsize the risk of owning a vehicle that has a depreciating value.

Collateral-free financing: This option does not continue the truck finance options. It is an entirely different loan provider. With it, you get the opportunity to take out unsecured business loans from a direct lender. No involvement of any asset is necessary in the case of this financing option.

Tax benefits for your business

Are you wondering how a truck can help you avail of tax benefits? The extent of tax deduction will depend on the amount you spend and the finance option you choose. It will vary according to the different finance alternatives available to you.

Determine the amount of tax you can deduct by reviewing each option carefully. Some of the options would let you claim the interest rate and the depreciation applicable for your vehicle for a tax deduction. On the other hand, options like a finance lease let you deduct the amount of tax equal to the value of the complete lease.

The best way to clear off confusion is by having a discussion with your financer. You must discuss this with your accountant also ahead of making any decision. It will make sure you can make the most out of the tax benefits.

Feasible repayment schedule

The best thing about having more than one option is that it offers feasibility at its best. Every finance alternative comes with a different repayment plan. You can go for the one that complements the financial condition of your business.

The duration of repayment is a crucial aspect as it can affect the amount you will have to pay to become the owner. Without knowing the length of the term, you cannot do forward planning of payments.

Immunity from asset depreciation factor

It does not mean the finance option for HGV will erase the depreciation factor. However, it can help you manage and reduce the effect of it on your business. When you purchase the truck outright, the payment concerns the current price.

However, the value starts depreciating after the very moment of purchase. Therefore, when you take out truck finance, you are free from the compulsion of paying outright. You get the liberty to pay in a monthly fashion.

You can search extensively to see which option allows payment concerning the residual value of the vehicle.

Competitive rate of interest

You can quickly draw comparisons between different offers you receive from different lenders. Everyone is quoting loan rates practically. You can fetch a loan proposal that offers competitive rates through the comparison.

Take note of the amount that fits your budget and the comfortable term, and search for the best lender. You can seek the help of business brokers who can simplify this search for you.

Financial coverage for new and used vehicles

HGV finance options not only cover the purchase of new vehicles but also used ones. You will have to convey your concerns to the finance provider. They will customise the finance deal by giving priority to your preferences.

The bottom line

Buying a heavy goods vehicle like a truck is an achievable task even when you have a limited budget. A wide variety of finance options will make this job easy for you. Analyse each of them thoroughly.

It will help you unveil the benefits you can enjoy with these options. Always remember to refer to the condition of the business finances to make a sound financial decision. Rule out the depreciation factor that is your main fear point by selecting the right finance option.

Stay on time when it comes to beating the payment deadline. Keep memorising the facets that this blog has already discussed. Hopefully, it will be helpful for you.

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