There’s a usual dilemma that businesses face. You’re getting more projects, which is brilliant! However it also means that before you can invoice for all this new work, your costs are going to increase.
That’s more significant than ever in the construction, transport and waste industries. Getting bigger projects means a huge investment in machinery and equipment – with an integral part of that being trucks.
For a quality truck, the capital you’ll have to put into this is huge, which is why businesses tend to look into financing trucks as opposed to buying one outright.
There are a range of options businesses are presented with when financing trucks. We’ll guide you through each of them below, and show you which one is usually best!
Hire Purchase
This is ideal for businesses looking to own their truck at the end of their repayment period. Your trucks appears as an asset on your balance sheet, and once you’re all paid up, it’s yours!
Usually these contracts last between 2-5 years, depending on the investment. By that time, your truck will have depreciated massively compared to when you first bought it. Plus, you then own a truck that’s been put to work for a long period of time. Think of all that wear and tear!
Finance Lease
Financing trucks via a lease agreement is a good way to reduce your tax bill, as rentals are fully tax deductible meaning you get to keep more of those year-end profits!
At the end of your finance lease, you can usually either extend the agreement or benefit from the sale the owning company makes. In our opinion, neither is ideal as you still don’t own the truck and a further investment is needed to keep your vehicle on the road.
Contract Hire
Contract Hire combines the best features of many types of financing trucks. Assuming you’re looking to make financing a truck as easy as possible, contract hire allows you to have the most flexibility and security possible.
It’s no surprise that this is the type of truck finance we provide here at Mac’s Trucks, as it’s the most customer-focused service available.
To begin with, financing a truck through contract hire means lower monthly payments. This is because your payments actually only cover the depreciation of the truck over your length of agreement.
You also get a fully inclusive service and maintenance package, which again minimises your costs and also helps when regulations change, as it means we’ll take care of the admin side of owning your truck.
When it comes to the end of your agreement, it couldn’t be easier to keep your business on the road. You can either take out a new contract hire agreement on your existing vehicle, or you can choose to hire a new one.
Financing trucks can be a difficult decision for a business, as it’s often seen to be more complicated than it actually is!
If you would like some advice, or are looking into which types of truck financing is right for your business, feel free to give us a call, or get in touch using our form.