By Author: Secured Lending
Every business relies on investment. The capital that you invest gets you the tools and inventory to run your business. This simply means that if you run a restaurant, you need space, table, chairs, chefs, dishes, and people to serve them. Similarly, a travel or transportation business will need you to have an office and vehicles that you can rent or provide travels facility with. Without these assets, there is no business and hence no profit.
Therefore, you need to invest on assets of your business and make them work for you and get you the money. To buy these assets, you need money and that is where loans come in. Again, the type of loan you are going to borrow will depend on what kind of asset do you need. For instance, in the restaurant scenario, the space that you are going to need along with chairs and tables will be called as fixed asset, which means it will stay and serve your business for a long period. You will invest on it only once and it will keep working for you. On the other hand, ingredients that you will need to prepare the menu are called current assets, which you will have to replenish regularly. For fixed assets, you need long term investments while current assets need working capital or short-term loans.
The sources from which short term business loans businessmen take include commercial banks, government financial institutions, and private lenders. In addition, there are several loan types and schemes offered by these lenders to address the singular demands of different businesses. Of all these different types of short term loans, vehicle loan is one of the most sought-after.
As discussed above, if you run a transportation agency, your vehicles are your assets that work for you. Similarly, other businesses need vehicle to operate in a smooth manner. Hence, the demand for vehicle loans is quite high in the market.
It is always good to know about loans and options before applying for one. It helps you make the right decision as per your financial needs and status. When it comes to vehicle finance, you can consider six options.
In this, the lender retains the ownership of the vehicle while your business can use it for commercial purposes and reap the benefits. The lender makes the purchase on your behalf and leases it to you. In turn, you have to make monthly payments to serve the lease term. You also have the option to pay the rest of the amount and take the ownership of the vehicle at the end of the lease term.
Commercial hire purchase
This allows you to hire a vehicle from the lender for a fixed period. You have to make monthly repayments and take ownership at the end of the term.
If you are an employee with a side business, then this loan is the best for you. In this, you can use your payment to lease a vehicle. The amount will be deducted from your bank account and you will reduce your tax income as well. You will have to remain employed throughout the period of lease.
It is a type of mortgage loan. Here the lender will offer you the entire amount to purchase a vehicle, which will serve as collateral. Then you can pay the sum back on a monthly basis within a fixed period.
Since it is for business purpose, you can apply for a standard business loan to make the purchase. If the need is urgent, you can take quick loans lenders provide. You can even take a term loan or line of credit to finance your business vehicle.
Several lenders provide regular car loans to businessmen for the purchase of vehicle. However, you will miss the tax benefits that come with standard vehicle loans.