Are you in the market for a brand-new truck? Buying a new truck is not a cheap project, so you will need to set aside a substantial amount of money for the purchase. But, due to the economic recession getting the cash you need for this investment might be a challenge. Fortunately, several financing options like TruckFinanceOnline can help you purchase your brand-new truck. Here is a look at eight feasible options you should consider.
Table of Contents
Finance Lease
Finance lease truck is used in situations where contract hire is not suitable. With this truck financing option, hire the vehicle for a fixed period. So, your business will record the vehicle in a balance sheet without the option of ownership. In addition, a finance lease offers a flexible and cost-effective way to use the truck while spreading the VAT payment across all the rental payments over the lease period.
The financial lease is a suitable option for those who need a truck fast and plan to use it for a short period. Once you find a leasing company, you will need to start by deciding the duration you will use the rental and the fee you will be paying. The rental charges will depend on the type of truck, its value, and the term of the agreement. Since you will get fixed, regular rentals, it will be easier to set up a budget, the rentals you get are not based on the annual mileage, and the car is an asset on your balance sheet, so tax allowances may be deducted from taxable profits.
Source: landlordzone.co.uk
Operating Lease
Using an operational lease to get a truck allows you to use the asset, but will not convey ownership rights of the assets, and the truck will not be on the balance sheet. So, using this option to get a truck is considered a form of off-balance-sheet financing. So, if you are searching for a truck financing option that will help keep the debt-to-equity ratio low, then this is the best option to use.
With this option, you will get the new truck and use it for an agreed period while paying the rental fees. Using this method to get your new truck offers you flexibility as you can change or update the truck to suit your work type. In addition, since there is no transfer of ownership, there is no risk of obsolescence, and you will get a tax reduction.
Chattel Mortgage
Source: estatecloud.co.ke
The other option you can get a new truck is the chattel mortgage. Here, you will need to get a lender who will offer you the funds that you will need to get the truck. The lender will take the truck mortgage as the loan’s security. Then you will continue paying the loan. Once it is complete, then you will automatically own the vehicle.
With the chattel mortgage, you might be liable for tax deductibles if you use the loan for business purposes. However, since you will be buying your new truck with installments, you will not have to get a considerable amount of money, which will help improve the cash flow. With this loan, you will also have an easier time budgeting the interest since it has a fixed interest rate and flexible monthly repayment.
Commercial Hire Purchase
You can also get a new commercial truck using the commercial hire purchase. You will need to get a vehicle financier who will buy the truck on your behalf to hire from them over sometime. With this option, you can use the vehicle for the contract term where you will use the vehicle, but you will not be the owner. You will only get the ownership of the vehicle at the end of the contract term when you pay the total price of the truck and the interest rates.
With Commercial hire-purchase, you will get contract terms that range from 12 months to 60 months. The hire purchase also has fixed interest rates and monthly repayments, and if the truck is used for business purposes, you will also get tax deductions.
Capital Lease
Source: businesswire.com
A capital lease is also another option that you can use to get a new truck. This is where you find a lessor who will lease you the truck and agree to transfer the ownership when you complete the lease period. Leases are long-term, and due to the lengthy loan period, you will get that the repayment rate is low. At the end of the lease period, you can buy the asset at a discounted price, which is better than the market value.
Capital lease works as a rental agreement, and it can also impact the business statement. As a result, it can impact the interest expense, depreciation expense, liabilities, and assets. Therefore, the business needs to break down the lease payment based on applicable interest rates and depreciation expenses.
Asset-Based Finance
You can also use your company’s assets to get a brand-new truck. This is where you use assets in your business to secure the purchase of your truck. Asset-based finance is suitable for businesses that have temporary cash flow gaps. It is an excellent option if the company is waiting for cash from the clients and urgently wants to get a brand-new truck.
To qualify for an asset-based financing option for your business, you will need to have more in-value assets than the truck you plan to buy. Most lenders prefer getting liquid collateral that they can quickly turn to cash. The main benefit of using this financing option is that it will be easier to get the loan since you have collateral. It is also an excellent option for businesses that do not qualify for a line of credit.
Novated Lease
Source: driveline.co.nz
Your salary package can help you acquire a brand-new loan through the novated lease. With this loan option, your employer is the one who will be paying for the truck lease and its running costs by using your salary package. With this loan option, you can get your new truck without compromising your lifestyle since you will be using the salary sacrifice option to cover the repayments.
If you change employment, you will still be required to continue with the repayment. However, you can choose to make the payment directly or transfer the agreement to your new employer. With the lease, you also enjoy getting fringe tax benefits that will come in handy if you are not on the highest tax rate.
Consumer Loans
Consumer loans are given to clients to finance a particular expenditure. For example, you can use this financing option to get your new truck. Depending on the amount you need and your credit score, the lender can give you the loan as secured or unsecured. If you are getting a secured loan, you will need to give a higher grant than the amount of financing. On the other hand, if you get a secured loan, then the risk to the lender will be low, and thus, the interest rate might reduce.
If you qualify for an unsecured loan, you will not need collateral for backup. But you will get a shorter repayment period, and the interest rate might be high. If you do not mind making higher payments on your installments, you can use this option.
Embrace Financing to Buy a Brand-New Truck Today
Whether you are buying your truck for personal use or business, it is vital to ensure that you have found the best financing option that suits your business. You also need to shop around the various truck financing companies offering the loans, review their terms, and choose the one that offers affordable and friendly rates. Good luck!
