A guide to HGV finance

If your business is involved in the carriage of goods – either your own, or those owned by others, on a haulage or courier basis – you are sooner or later likely to consider your need for a heavy goods vehicle, or HGV.

Whatever type, make or model of HGV might be appropriate for your business, funding its acquisition is likely to represent a major concern for any small to medium sized enterprise – the concern is likely to increase in direct proportion to the size of the HGV fleet you may need to run.

Why you may need HGV finance

HGV finance might allow you to acquire the vehicle or vehicles your business needs as and when you need those vehicles.

Without timely and adequate HGV finance, you may be unable to meet the many opportunities presented to your business and, therefore, effectively stifle its growth.

Types of finance available

Fortunately, therefore, there is a wide range of potential financing options available to you:

Operating Lease

  • an alternative form of lease is the operating lease, which again involves your paying a fixed monthly rental for an agreed period;
  • at the end of the period the vehicle is returned to the owner lessor and you are free of any hassle involved in its purchase and eventual disposal;
  • the rental payments, which are tax deductible, appear in your statement of profit and loss, without appearing in your balance sheet;
  • the amount you pay in rent is calculated with reference to the vehicle’s value at the start of the agreement and its residual value at the end – so, may prove attractively affordable;

Finance Lease

  • a finance lease has similar tax advantages – since you are renting rather than buying;
  • the length of a finance lease is typically determined with reference to the estimated useful economic life of the vehicle;

Hire Purchase

  • if your intention is to purchase the vehicle for your business, hire purchase is a long-established means of doing so;
  • it involves payment of a deposit (typically of around 10% of the vehicle’s value), followed by fixed monthly instalments of the balance;
  • at the end of the hire purchase agreement, ownership of the vehicle passes to your company.

Why use ACF?

With so many financing options available, it might be difficult deciding which might be appropriate – and most economic – for your particular business.

Here at ACF Direct, we are able to help you make that decision and, drawing on our working relationships with more than 40 finance providers, identify those likely to represent good value for money.

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