Commercial Vehicle Loans
When it comes to running a thriving business, money needs to be flowing through it daily, all of the capital can’t be tied up in vehicles and inventory. For this reason it’s almost mandatory that most commercial vehicles are financed, and at a good rate to keep cash flow positive. Bad financing, that restricts the ability of the business to buy enough inventory or pay workers, can be the quick demise of the company, so financing decisions must be made wisely.
It Doesn’t Hurt To Get Professional Accounting Advice
Many times a business owner will have a particular new vehicle in mind that he thinks will be a great addition to the company and bring in lots of profit to the bottom line. Unfortunately, that’s not always the case, and it can even cause hardship for the company if the commercial vehicle financing isn’t handled correctly.
There is usually a fairly large down payment, maybe up to 20%, then the rest is paid along with interest by installment payments. However, there can be a huge difference in interest rates, and some installment terms can be too short for some types of vehicles.
In addition to that, many entrepreneurs can be overly optimistic about the income generated by just one truck, or they aren’t taking into consideration all of the costs of operation. An accountant consultant can put all of that into perspective and give an honest bottom line income that must be generated for a vehicle to be profitable.
Lots Of Money Can Be Saved By Buying Second Hand Or Auction Vehicles
Lots of trucks have extremely long lifetimes and if well taken care of can last decades. Buying them brand new can be quite expensive and, just like a new car, they depreciate rapidly at first, then settle into a steady decline. If maintenance and repairs can be managed in-house, then lots of times the used vehicle is really the smart way to go.
Another purchase option is buying at an auction, especially during hard times, since many other business owners will have overbought and overpaid for equipment.
Then their bank repossesses the machinery or trucks, and auctions them off. Sometimes equipment at auctions will sell for as low as 10% of real value, saving the purchaser many thousands in principle and interest charges.
Always Be Ready To Walk Out And Find Another Deal
Through careful negotiation, a good price and terms can usually be had, but only by being willing to pass up the deal can the absolute best price be reached. You can almost always find a better deal if you look long enough, and as long as the seller knows that, they’ll offer the best price possible to complete the transaction.
It’s also a good idea to bring in a qualified mechanic to do a complete inspection of any used equipment or machinery to protect yourself from fraudulent sellers, and also to use as a bargaining chip during any negotiations over price.
When It Comes To Commercial Vehicle Finance They Can Offer Lower Interest
There are many times that the path of least resistance is the highest interest rate and there is actually one or two lower rates that can be offered. The commercial vehicle finance companies is usually getting a higher commission if he sells you at the higher rate, and it can be substantial. Always ask, and always check other sources for comparison to make sure you’re getting the lowest possible rate available in the marketplace.
Buying new equipment, trucks, or machinery can be tricky, but by being careful and doing plenty of research you can level the playing field. Negotiate everything for the best deal, if for no other reason than to let the dealer know that they won’t get away with anything, that way they won’t try some of their best tricks on you at all.