Having trucks as a logistics company is vital, but it can be difficult to apply for fleet finance if you do not know how to. There are a number of important steps in the application procedure which you must follow, outlined below. It is possible to finance a fleet if you understand how the process works.
What documents do you need?
Fleet finance is different to a personal loan, so if you are interested in purchasing from the Babcock industrial range, you will have to provide different documents to a personal loan. The documents you will have to provide are:
• Company registration and VAT number
• Banking details and balance sheet information
• Contact information including registered address
• Director / Member / Trustee details
• Details of the asset you wish to finance
• Details of the supplier you wish to purchase from
• A business plan outlining what you will be using the vehicle for
Once you have these documents in place, you will need to fill in an online form which will ask for further details about your business and the asset. Once you have sent in the form and these documents, a consultant will contact you.
What are the different types of leasing options?
If you have decided not to buy your vehicle but would rather lease, there are several options available for you to choose from, as described below.
Full maintenance lease
A full maintenance lease is a monthly rental fee which includes maintenance costs, replacement tyres and the use of the vehicle. It is a cost-effective option which allows you to optimise the cost of building your fleet. The monthly rates are fixed for the full term of the lease and are fully tax deductible. This is an ideal option if you are on a tight budget and are not able to afford maintenance costs on top of monthly lease fees.
Operating lease
An operating lease combines a fixed monthly rental fee with the option to pay the maintenance costs yourself. The fixed cost covers services which include procurement and the monitoring of usage and tyre replacement, if needed. The costs also include an optional reporting package. This option is more suited to logistics firms who have bigger budgets and can afford to pay their own maintenance costs.
Lease-to-own
A lease-to-own agreement or rent-to-own agreement is a lease agreement at the end of which you will own the vehicle. The ownership will only be transferred at the end of the lease agreement, and should you not be able to make the monthly repayments, the bank or financial institution will repossess the vehicle in order to recoup their money. This is an ideal option if you feel that you would like to keep the truck in your fleet for future use.
Keep your options open
You should look at more than one bank or financial services provider when you apply for finance, as you may not be approved by the bank that is first on your list. If this happens, you will be tasked with starting the application process again for another lender.
Looking at the options on offer for multiple lenders will allow you to see which one is the best choice for your needs. You could browse comparison websites, consult with truck finance experts or conduct your own research into different financial institutions. This should be one of the first steps you take when looking into financing a fleet.
What are the different features?
As well as looking at the different lenders, you should also look at the different finance features that are on offer from these providers. Knowing the different features will help you to decide on a service provider.
You should look at aspects such as how flexible the finance is if you lose work, what sort of policies are in place for additional repayments and whether you can extend the loan or not. If you would like to extend your finance or lease, you will need to know which provider allows for this option. You should also look into whether your bank allows you to purchase from a supplier or a private seller.
Set aside a budget for payments
Running a logistics company can be expensive when it comes to the maintenance and wear-and-tear costs that are involved. You will need to set aside time to draw up a budget and calculate your affordability before you apply for truck finance.
Your budget will need to factor in such things as procurement fees from the bank, maintenance costs if you have to perform services or repairs and extra mileage costs should you go over your limit on your lease agreement. If you find that you are not able to afford fleet finance, you should speak to a financial advisor for help.
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