A guide to bus & coach finance
Whether you are just starting to pursue your business dream of operating a bus or a coach for the first time, or whether you are looking to expand an existing fleet of vehicles to accommodate your thriving business, the question of finance is almost certain to raise its head.
Funding for such a major capital investment is unlikely to be just sitting in your personal or business bank account, so you begin a search for the most appropriate – and competitively priced – forms of credit.
Why you may need bus and coach finance
So, you might not have access to the funds required to buy a bus or coach – still less a whole fleet of them.
But is ownership of those assets the one and only goal? There are other ways of financing the way you obtain the rolling stock that is essential to the business you are planning to run.
Let’s take a closer look at some of your options.
Types of finance available
Some types of finance allow to use the vehicle just as if it were your own, but without any intention of your owning it, others are the route to ownership and still others are a mixture of both:
- An Operating Lease is specifically designed to enable clients to remove the financed asset from the balance sheet, which can improve gearing and provide additional tax efficiency.
- this is similar to contract hire in that it involves the hire of the vehicle, at a rate determined by the difference in value at the start of the lease period and its residual value at the end;
- the risks associated with determining that residual value and the administrative costs involved in its sale remain with the owner of the vehicle, the lessor;
- although this also relies on your hiring the vehicle rather than owning it during the agreed lease period;
- a finance lease typically lasts the entire useful economic life of the vehicle concerned;
- the asset appears on your company’s balance sheet;
- when you enter a hire purchase agreement, you are signalling your intention to buy the vehicle;
- purchase is made by putting down an initial deposit (typically 10% of the purchase price) and paying in the balance in equal monthly instalments over a period of, say, one to five years;
- ownership passes to you only when the final instalment has been made and if you default on payments before then, the vehicle may be repossessed.
Why use ACF?
Choosing the means of finance likely to be suitable for your individual business at this particular stage in its life might present a bewildering number of options.
Here at ACF Direct, we may help clarify the issues involved, suggest what might be suitable for your business, and draw on the products of more than 40 finance providers in identifying a competitively priced solution.