Different Car Loan Options for Business Use
What many people do not know is that there are numerous kinds of car loan options that one can choose from, depending on one’s needs. There are loan options for cars that are acquired for personal use. On the other side of the spectrum, there are also car loan finance options that are specifically designed for businesses and other commercial organizations. This is why if you wish to provide company cars to your employees, or would like to have vehicles on hand for business use, get to know your business car finance options thoroughly.
Hire Purchase is the first option that you need to consider. This is a rental agreement that basically works in a rent-to-own capacity. With hire purchase, you will be able to lease any vehicle that you want for a specific term of your choosing, ranging from one to five years. Full use of the vehicle will be given to you, throughout the term that you chose. However, ownership of the car belongs to the lender throughout the duration of the term. You can only take ownership of the vehicle once you have paid your last payment at the end of the term.
Next up is Chattel Mortgage. Much like a secured loan, the vehicle that you are purchasing will be used as security for the loan. Basically, the funds to pay for the vehicle or chattel will be advanced to you by the lender. A mortgage will then be taken out on the vehicle as security. As soon as you have paid off all your loan obligations by the end of the term, this mortgage will then be removed. Unlike hire purchase, however, you get to own the vehicle right from the start.
Car Finance Lease
The third business car finance option that you should consider is the Car Finance Lease. This rental agreement allows you to choose the type of vehicle to lease, as well as the duration of the lease, so it is actually quite a flexible option. First of all, you can choose any type of vehicle that you want, which the finance company will then purchase on your behalf. You can then lease the same vehicle from the finance company for a certain term, often between 36 to 60 months, at a fixed monthly rate. At the end of lease term, you can then gain full ownership of the vehicle by paying its residual value. You also have the option to either trade-in the car to lease a new vehicle, or simply continue the lease.
A Novated Lease is the fourth business car finance option available. If you wish to provide both your existing and potential employees with vehicles as part of their remuneration package, then this is a great product to consider. Basically, a novated lease is undertaken by three parties, which are the employee, the employer, and the finance company. The lease’s monthly payments are paid to the finance company by the employer on behalf of the employee, while at the same time, deducting the same amount from the pre-tax salary of the employee. Responsibility for the lease will automatically revert to the employee if he leaves the company for any reason.
Low Doc Car Loans
The fifth option that you need to consider is Low Doc Car Loans. This is specifically made for small business owners or self-employed individuals who have very little financial documentation. Most mainstream rental agreements and car loans often require mountains of paperwork in order to be processed. This does not apply to low doc car loans. With this process, the usual “red tape” that is associated with applying for a loan is effectively done away with because lenders will use other means to verify income.
In a nutshell, your options when it comes to getting a car loan for your business use are aplenty and rather comprehensive. As always, it is important to do your homework and get to know each option thoroughly in order to make the best possible decision for you and your business. Do not just go for the first option that is offered to you. Take your time and consider both your long-term and short-term goals. You will not regret it.
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