We know that the world of asset finance and leasing can seem a bit alien to the uninitiated – but we’re here to help! Here is a bonus instalment in our mini-series of blogs explaining the main finance and leasing options open to you. This time we’re exploring options for fleet funding to help you select the right finance option for your business when you need to secure a fleet of assets, such as cars, vans, buses, agricultural machinery, or even planes!
What is fleet funding?
Fleet funding is simply the term for the means by which a business funds a number of similar assets in its use – for example, its company cars. There are many finance options open to business, and the best option will depend on factors such as how long you will use the fleet of assets for, affordability, and tax considerations.
What are the options?
Contract Hire – Most companies will opt for this form of leasing which is essentially a long-term rental agreement whereby you have use of the asset for a fixed period (and often fixed mileage agreed at the start), but ownership remains with the leasing company, with no option to buy. Payments are fixed and maintenance can be included in the contract, easing cash flow issues.
Finance Lease – Similar to contract hire with a finance lease the business has the use of the vehicle for a fixed term with fixed payments, but the lessee takes on the residual value risk – so when the asset is sold any shortfall between the proceeds and the final balloon payment falls to the lessee to settle.
Hire Purchase – This is a form of deferred purchase where a business makes set monthly payments for an agreed period, at the end of which a final balloon payment is payable, after which ownership of asset transfers to the business. They can then keep it, sell it, or if agreed on upfront, sell it back to the leasing company at a guaranteed buy-back price.
These are just some of the many finance options open to you if you’re looking to fund a fleet of assets for your business – and we’re ready to help you explore them further and find the right fit. For tailored advice and support get in touch with Dawsongroup Finance at email@example.com or by calling 01425 474070.