Purchasing a truck outright can be difficult for most businesses as a large upfront payment could eat into your cashflow. If your HGV could use updating, truck finance can be a great option to help your business.
What is Truck Finance?
Truck finance is a type of asset finance, a form of lending that allows a business to purchase a truck without too much of the upfront costs. Typically the loan will be secured against the truck, providing the lender with a form of security for the loan.
Types of Truck Finance
There are different types of truck finance available, the most common types are:
Hire purchase is a way for your business to purchase a truck. Typically, you’ll hire the truck from the lender and make repayments over a set period. Once the repayments are complete, you own the vehicle.
Lease purchase is a flexible type of asset finance. The lender provides you with the funds to purchase the truck, and you would lease the truck from the lender for an agreed term. At the end of the lease, there’s the option for you to buy the vehicle by paying the residual value, sell the vehicle and settle the residual amount, or return it to the lender.
Finance lease is an option that allows your business to use the truck, without owning it. You would pay a set amount each month and at the end of the term, you would return the truck to the lender.
What do I need to get truck finance?
When applying for truck finance, the lender will consider the age of the truck and its value to determine how much you will need to borrow.
It’s important to show the lender that your business is financially healthy and will be able to repay the loan.
To maximise your chances of being approved, make sure that your business has:
- A good credit score
- Your last set of filed accounts
- A plan for what you want to use the truck for
- A deposit - typically 10-20% of the cost of the truck
Benefits of Truck Finance
There are several benefits of using truck finance for your business:
Truck finance allows businesses to spread the cost of a truck over time, freeing up cash flow for other business expenses.
With the introduction of “full-expensing” businesses are able to fully deduct plant & machinery expenses, reducing your business's tax bill.
Access to Newer Trucks
Truck finance allows businesses to access newer and more reliable trucks than they may be able to afford outright.
Choosing the Right Truck
When choosing a truck to finance, it's important to consider your business's needs. Some factors to consider include:
- The size and weight of the goods or equipment you need to transport
- The distance you will be travelling
- The terrain you will be driving on
- The type of truck (such as flatbed, box, or refrigerated)
We can help by connecting you with a wide range of specialist lenders. Speak to one of our funding specialists to find the right option to fund your truck purchase.