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Things To Think About When
Applying Before applying for finance products, there are a couple of things to think about. Chris McCauley, Head of Business at Capital Fleet Solutions talks us through these:
1. “Budget. Don’t enter into any agreement without properly budgeting the total cost. Each agreement is a different length and has different terms, so if you’re looking at an agreement with a balloon payment at the end, for example, make sure your business planning allows you to do that.
2. Deposit. This is just as important as budget. In most cases, the more deposit you put down, the lower the monthly payments, but depending on the product, sometimes it may be better for cash flow to put down less. If you have an idea of what you want your deposit to be, this will make the process of applying easier.
3. Finance partner. There are numerous finance brokers out there, but it’s so important to choose a partner that has a good reputation and the right experience. They should always be FCA registered.
4. Fair wear and tear. This mostly applies to the finance product you select, but we always advise businesses to look through what the requirements are for returning the van. Especially important to drainage businesses due to the nature of their daily work.”
“All types of businesses can apply for finance including sole traders, partnerships and limited companies. You can apply for business finance if you are buying a van on the business for an employee to use both personally and for business use but bear in mind there could be an income tax liability for the employee.”
“When applying, the business will need to go through a credit check. Your finance provider will check all the details you’ve provided and check credit agencies. Other things they look for are:
1. When the business started trading 2. Credit information on the directors 3. Financial performance including Balance Sheet and Profit & Loss 4. Public records – County Court Judgements, bankruptcies, insolvency 5. Companies House information”
“If you are a start-up, it’s more about your personal credit than the business (because the business has no history to evaluate). You may need to provide proof of trading or a Directors’ Guarantee (where you personally are liable if the company can’t fulfil the agreement).”
10 | June 2024 |
www.draintraderltd.com
change in the rental amounts for this additional period.
For drainage companies, the benefits of Contract Hire come with a big caveat. Paul Jackson explains, “You are responsible for ensuring the van is compliant with the servicing and MOT requirements. This information can be found in the van handbook. If the agreement is without maintenance and is longer than three years, you will take over the MOT obligations from year three. As the agreement is based on expected mileage, if you exceed this you will be charged. The charge per mile will be shown on your contract along with your expected mileage.”
“Fair wear and tear is also taken into consideration. It occurs when normal usage causes acceptable deterioration to a van. It should not be confused with damage from a specific event, such as an impact. At the end of the agreement the van will be inspected for damage,
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