Business car finance helps you borrow money to purchase new vehicles for your company.
Put simply, it means you can turn the up-front cost of buying a company car, van or other vehicle into a monthly cost.
Options include letting you lease the car for a period of time and pay towards the cost of the vehicle on a monthly basis, or taking a loan to outright buy the car and paying it back over time as well as several hybrid approaches of the two.
There are a few options when it comes to getting finance for a business vehicle - especially a new one.
Plenty of manufacturers offer deals directly - including contract hire, hire purchase and full payout leasing.
Discounts and even 0% finance deals are sometimes possible when purchasing new vehicles direct from manufacturers - so it's an option worth checking out.
You can also go to a bank or other lender, general car dealer or specialist leasing firm to pick up a vehicle.
You also can get finance to buy a wide range of business vehicles, including:
Cars
Vans
Tractors
Buses/coaches
HGVs
"Plenty of manufacturers offer deals directly"
Your business hires a vehicle from the finance company for a set time and pays a fixed amount. Contract hire may come with an agreed mileage limit.
Your business hires a vehicle and has the option to buy it outright at the end of the term. You normally have to put down a deposit at the start and stay within a mileage limit.
Finance lease lets businesses hire a vehicle for a specific period, rather than outright, and make regular payments towards the cost of the vehicle. This also avoids a huge upfront cost for the business.
Your business borrows the cash and uses it to buy the vehicle up front, with no mileage restrictions or other conditions.
If you're planning to upgrade to an electric vehicle, you actually might find you can access a little more finance than otherwise.
That's because as well as being able to find finance for a new vehicle, you can access green loans too. These are offered by providers to businesses.
On top of that, there are a series of government grants and incentives to help the UK's transition to Net Zero.
You can see what support is available near you on the British Business Bank page for SMEs here.
You don't always have to put down a deposit. Some company car finance options require a 0% deposit, but they are more expensive.
There are sometimes mileage restrictions, depending on the company you choose.
In terms of whether you'll own the vehicle at the end of the finance agreement, it depends on the finance agreement you choose. Some require you to pay a final lump sum payment to own the vehicle, so check this.
Yes, your business normally has to pass a business credit check and demonstrate that it can afford the finance agreement.
Yes, you can use asset finance to fund a vehicle purchase. Asset finance is where the lender purchases your chosen vehicle on your behalf, then you pay them back.
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