One of a company’s largest expenses can be vehicles. Whether a sole trader with a “white van” or a larger business that operates a fleet of vehicles you need to know what your options are and the most cost effective way of operating company vehicles.
Traditionally many companies bought their vehicles and kept them for a certain amount time before renewing them. More recently businesses have turned to contract lease hire as an alternative to owning the vehicles. But what is the difference for companies?
Off Balance Sheet Financing
Leasing vehicles is referred to as “off balance sheet financing”- this means the vehicles are not shown on a company’s balance sheet as either an asset or liability as they would be if purchased with a loan. By keeping vehicles and other equipment off the balance sheet it reduces the debt burden of that company. Businesses only have a certain amount of credit available to them.
Are you struggling to obtain credit in order to buy a carHow do you get a car with bad credit or no credit history?Are you struggling to obtain credit in order to buy a car? Have you been turned down for loans and HP because of bad credit or a lack of credit history?There are many reasons why you may struggle to get any type of finance. You may have a poor credit history having defaulted on past agreements. You may live with or have lived with someone who has a bad credit rating. If you are a new business in your first year of trading you won’t have a full set of accounts to show how much your business is turning over, in fact it could be 2-3 years before you have enough trading accounts to obtain credit.Funding a vehicle can prove difficult and you may feel like you are running out of options