Vans are one of the most versatile assets that any company can acquire. However, purchasing a new one may be difficult, especially for small firms. It may force businesses to settle for older vans, which may serve them poorly. Fortunately, businesses could still acquire a new van through several financing options.
Vehicle financing removes the need to pay cash upfront. You could negotiate to get a finance agreement tailored to your budget. Alternatively, you could also obtain van finance for your business via a business car loan.
There are several things you should know before looking for financing. Different funding strategies have advantages and disadvantages. Your choice of financing will most likely be determined by personal preference and your current financial situation. That said, here’s a guide on how to finance a van through your business.
- Research Dealerships
There is a strong probability that your area has several dealerships. You should do some research to find one that finances and sells vans. These dealerships are easier to work with since financing may be easier to get. You could even get a discount if you acquire a fleet of vehicles. Moreover, you should also seek dealerships with a large inventory of vans to have more options. Compare the dealerships to see which one offers the best deals.
- Check Credit Score Requirements
Before going out and buying a van, you should check your company’s credit score. These ratings will play a significant role in determining the success of your application. Most, if not all, bankers will request a background check on your company. They require this information to analyze your risk profile. A good credit rating increases the likelihood of your application being accepted.
As a result, it’s always a good idea to conduct your organization with credit ratings in mind. Try to make excellent financial decisions from the start to help you create a strong credit score because you’ll need it. Before seeking loans, you should ideally know your credit score. Credit bureaus often provide access to your credit score. A score beyond 700 is considered good.
The financing options discussed later in this article will likely have different credit requirements. It’s best to look for those with requirements you can meet based on your financial health and credit record. Then, ensure that you have gathered all the relevant application paperwork. You may need your VAT and registration numbers, contact information, business banking information, and business address.
- Establish A Budget
Each finance agreement will come with a cost (implicit or explicit). These costs may include maintenance, interest charges, fuel, and monthly installments. It would help if you stayed within your budget range for this investment to be viable. Also, consider that you may have to pay a deposit to secure financing. Therefore, it would be best to have a budget to guide you in getting the right deal for your business.
- Choose Financing Method
To get a van for your business, you must either buy or lease the van. Bigger companies may have the financial wiggle room to buy a van in cash. However, smaller enterprises may have limited funds. Fortunately, you do not have to pay cash upfront to purchase a vehicle. The following list details the options you have for financing a van.
- Loan – You can secure a corporate car loan from the dealership or your bank. You must establish the interest rates and then choose the one with the best deal. You’ll likely have to submit a loan proposal in writing. This document describes the loan amount required, the vehicle’s intended use, collateral information, and who will use the van.
- Hire Purchase – This option enables the hirer to acquire the van with the option to purchase. You’ll be required to make regular monthly installments. You can then assume ownership of the van once you pay all the installments.
- Finance Lease – This option allows you (the lessee) to use the van with the ownership remaining with the lessor (finance company). You don’t have the option to purchase. Once you reach the end of the agreement period, you either return the vehicle to the lessor or you may request an extension of the agreement. Alternatively, you may facilitate the sale of the vehicle to a third party with you acting as the agent upon agreement with the finance company. You will then receive a fixed percentage refund for facilitating the sale.
- Personal Contract Hire – This option allows you to rent the van instead of buying it. Some deals may have maintenance covered. So this may be the most economical solution for most small businesses. Plus, you could always rent a new one after a specific period.
Conclusion
When it comes to van financing, there is no one optimal solution. The option you choose depends on your current financial situation and economic circumstances. It also heavily depends on your credit history. So to increase your likelihood of obtaining van financing, invest in improving your credit score.
