Do you know what business vehicle refinancing is? It is a term used to refer to various borrowing options to help companies pay for new trucks, vans, cars, and other vehicles that are used commercially. This is similar to auto loans, except that not all lenders offer business vehicle refinancing and that such refinancing will have different application requirements.
So, are you interested in obtaining business vehicle refinancing? Here are the options you have:
1. Lease to Buy
Under this option, the business owner or employee will rent or lease a truck or other vehicle to perform their duties. The lessor will then sell the equipment to the employee or company at a predetermined price. The payments can also be deducted from the gross income of the worker.
This is a good option when the employee has saved enough money to pay back the price at the end of the lease. However, it is best to know if the equipment is worth the cost of the lease so that you can have enough money to pay the lease in the end.
2. Small Loans from Local Banks
Not all banks offer business vehicle refinancing, but if you find one that does, then you can approach them and ask for a business loan. Lenders will be more willing to provide you with these services and terms if your company has the regular income to cover the interest for the entire loan period. In addition to that, you should be prepared to give more documentation than you would when applying for personal credit.
3. Commercial Financing
What many people do not know is that commercial financing and business vehicle refinancing have similar applications. In fact, there is no difference between these two, except that commercial financing is more costly.
This is because lenders will only provide loans to businesses that have been operating for a couple of years. In addition to that, the company must have enough gross income every year. That said, these loans do not require a lot of documentation and are easier to get from lenders, but the initial requirement is just more challenging.
4. Commercial Line of Credit
There are times when business owners want to make inventory improvements but do not want to spend a lot of cash just to get a new truck or van. With this line of credit, you can borrow money as you need it, only if the equipment is approved by the lender. This is definitely a good option if you want to expand your business but not spend a lot of cash at the same time.
It is also important to remember that the interest rate for business vehicle refinancing is higher than for personal lending because the risks are higher. However, this higher risk can lead to higher returns, which is a good thing if your business is growing fast.
There are a lot of ways to fund your business, specifically for your vehicles, but the four options that you have presented above are the best and are the most common. If you want to get the most out of your business vehicle refinancing, you should use the opportunity to look for a better one. Always compare the different financing options you are given, and pick one that allows you to get what you need while enjoying maximum savings.
Wealthy You is an Australian mortgage company that offers a variety of financial solutions to meet various needs. If you are looking for car finance in Sydney, check out what we can offer to you!