There is no denying the importance of having a van for your business’s delivery services, but the biggest problem that arises is that being in the initial stages of your operating activities, you might be hard pressed for money to close a deal.
Every start-up has a limited budget, and as such, you have to learn the art of juggling the different expenses against the capital and income in the beginning. However, the question of how to finance your business van can mostly be answered by exploring the following options available in the market:
Opt For a Hire Purchase Agreement
This is an easy and affordable way to own a commercial van for your business without making a huge dent in your business budget. By opting for a hire purchase option, you can get a van for use, by paying an initial deposit and then following it up with regular monthly payments. In this way, you continue to pay monthly instalments and use the van in the meantime for all business activities until the end of the duration of your hire purchase agreement.
Your agreement would entail the time period for which you will be required to make monthly instalments and payments for the van. When the time is completed you will get ownership of the vehicle and it will be a new asset in your business portfolio.
Buying a commercial van through a hire purchase agreement option is a great opportunity for small start-ups and businesses as it ensures easy payment options and vehicle ownership at the end of all payments. One other benefit to small businesses is that the interest rate charged against the hire purchase agreement is deductible against your business tax.
Balloon Hire Purchase
Another option to explore if you believe that your business will experience an upward surge in the upcoming years is the balloon hire purchase. In this type of financing option, a start-up has to make small payment instalments each month for the decided time period, and then make a balloon payment right at the very end of the agreement duration.
This option is a great one for start-ups who are short of capital in the initial stages, yet hope to earn good profits in the years to come. With the small monthly payments and the balloon payment at the end, you get complete ownership of the commercial vehicle.
Contract Hire Arrangement – Would It Suit You?
You can always opt for a contract hire arrangement as well if it suits you. This is a lease deal and includes all service and maintenance charges, included within a single monthly payment. The benefit you might get from this arrangement is that you can change the type of commercial vehicle you want in the next month, and there are also no hassles of van ownership attached with the choice.
Whatever option you choose needs to be in alignment with your business goals and start-up budget in order to be a success. Be sure to get advice from your accountant and spend some time shopping around for the best deals.