Essex Commercial Finance

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Based in Chelmsford

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Commercial Finance

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Does Your Business Need Wheels For The Roadmap Out Of Covid?

Electric cars.

None of us are going to trade out of this Covid environment by standing still – but when you are looking at new or replacement vehicles for your business, you should conserve cash and use smart finance.

Whether you are looking for New or Used vehicles, a single vehicle or entire fleet – using the right finance for your company in this environment is the smart choice. Conserving cash within your business right now makes sense – none of us know what is around the next corner or when we will need a cash buffer.

Tax efficient, AND better for the environment??

There are a range of CO2 emissions bands, and your business can benefit from an increased offset against profit the lower the CO2 output of your business vehicles. 

I’m sure that you can understand therefore that we have started to see a shift away from mostly diesel cars being used for business; we have seen great interest in hybrid and electric models, and yes, Tesla is very much on the scene as a business car!

Leasing Finance and Hire Purchase facilities are treated differently for tax purposes in your accounts, and it is worth having your accountant’s confirmation of which is more beneficial to you:

  • Lease payments appear on your Profit and Loss accounts as an expense
  • Hire Purchase is accounted for differently, counted as an asset as if already owned on your Balance Sheet, and so you account for its depreciation

New Vehicles? The ‘One Stop Shop’ of Business Contract Hire to Lease your company’s vehicles

Whether you are looking for a single car or van, or an entire fleet, our vehicle leasing partners can source, finance and add in Maintenance and Insurance product options so that you really do only have to go to one source for your requirements.

Commonly the leasing company will achieve a better up-front price for the vehicle than your company could through their supplier network, and this improves the terms of the lease for your business.

  • Lease the vehicle for your business for a fixed term, commonly between 2 – 5 years
  • Agree a fixed monthly lease payment at the outset for the term of the deal
  • Set the annual contractual mileage when you take out the lease
  • A common optional extra is a maintenance contract over the same term, where for a fixed monthly cost servicing, replacement tyres, maintenance and repair costs can be budgeted for at the outset
  • At the end of the lease term, you hand back the vehicle, and subject to there being no excess mileage or outstanding damage to the car then you have nothing else to pay

Businesses Lease their vehicles as a way to do their business – to deliver goods for example, or to get their sale people in front of their customers. So while the company won’t own the vehicle at the end of the contract – it will have paid for itself over the term by the business that it facilitates for you.

How does Hire Purchase (HP) differ to Leasing Finance? 

In a nutshell, with Hire Purchase you are spreading the cost of owning a vehicle over an agreed term, but at the end you have an additional option to purchase the vehicle – something that you cannot do at the end of a lease.

With Hire Purchase your contract can include a final residual or ‘balloon’ payment at the end of its term, a price at which you can then buy the vehicle outright.

A company can plan to use the vehicle longer than the finance term – so by agreeing the residual or ‘balloon’ payment at the outset they know from the start what the total cost of owning it will be.

On a Hire Purchase agreement, a company pays the VAT up front on the cost of the vehicle – which can be fully claimed back if eligible under normal VAT rules. (See https://www.gov.uk/vat-registration for relevant links)

A residual or ‘balloon’ payment is an option – the company can hand the vehicle back at the end of the agreed payment term without depreciation risk – it is not a compulsory purchase at that point!

We are advocates of cash conservation in businesses in this climate, and can work with our partners to provide you with options on new or used vehicles, sourcing, Leasing or Hire Purchase.

Because we are independent of any ties to one lender, we can instead access the whole of market – including vehicle leasing companies, specialist asset finance providers and bank facilities.

We can commonly achieve system-based approval same day for single vehicle finance applications after submitting your proposal; for multiple vehicles or more complex applications we will support the information and document gathering, and liaise with lenders to ensure that they have everything they need to get your business on the road.

How Do You Want To Get Funded?

Mark.

mark@essexcommercialfinance.co.uk / 07726 195 106

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Essex Commercial Finance Limited  is a company registered in England and Wales with Company number 12610135
Registered Office : Suite 3, 8 Kingsdale Business Centre, Regina Road, Chelmsford, Essex, CM1 1PE

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