How can Haulage & HGV asset finance benefit your business?

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How can Haulage & HGV asset finance benefit your business?

Haulage asset finance

Working within the haulage industry can be incredibly rewarding and profitable. However, it does demand some heavy costs to start, grow and succeed the business; Asset financing is without a doubt the best method to scale your haulage business.

The large upfront costs that are associated with Haulage and HGV in the history of the industry are now much more affordable for both start-up businesses and developing businesses looking to expand.

The cumulative costs of acquiring and operating vans, ever-increasing fuel prices, and inevitable maintenance expenditures can make it difficult to keep healthy cash flow. Whether you run a freight company, public transport, or road haulage business – you’ll be familiar with the impact of the various costs that accompany the haulage industry.

Staying in the haulage business means keeping every cost under control – and these are the costs you face:

  • Fuel costs including duty –  accounting for about a quarter of all operating costs
  • Road and bridge tolls, and city congestion charges
  • UK regulation and compliance costs
  • Staff costs – the average salary is around £22k, and demand for qualified drivers is pushing wage costs upwards.
  • Vehicle excise duty (VED) Vehicle-related costs
  • HGV insurance costs
  • HGVs purchase and leasing costs
  • Slow payment of sales invoices
  • Trailer hire
  • You also face almost entirely unregulated competition from Eastern Europe with lower fuel and labour costs
  • Funding for growth

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Why asset finance?

Asset financing for haulage allows you to spread the costs and repay a lender while your vehicles are already working for your business. There are a wide variety of financing schemes available within asset finance, all of which can benefit your business depending on your situation.

The advantage of asset financing schemes over traditional finance from vehicle suppliers is that they hide a lot of initial costs in order to profit as much as possible, and the purchase price is inflated as a result.

You could be better off asking for their best price for cash and getting finance from a specialist lender. Your overall costs and monthly payments could both be reduced.

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Asset Finance options?

Hire Purchase

Hire purchase asset finance for haulage does what it says on the tin. Your vehicle is hired until you pay enough to purchase and own it outright. This option helps you manage your cash flow by spreading your payments regularly over a set period of time.

AN initial deposit is required, then set payments are spread over a period of time, usually a maximum of 5 years. Alternatively, you can also opt of the balloon payment option; this method allows you to make smaller monthly and pay a lump sum at the end of the payment scheme. You can also choose to avoid the balloon payment if you want to return the vehicle.

Lease Finance

For the most flexible asset financing option, go for leasing. This payment method allows you to get new vehicles, and upgrade them much more frequently. You can also find some leasing schemes which let you own the asset outright at the end.

Additionally, you can include insurance and maintenance for the vehicle on your leasing agreement. When you want a new vehicle, you can simply upgrade it for a similar price as what your leasing plan was for.

Contract Hire

This method of asset financing for haulage lets you use the latest vehicles but avoid the risks and associated costs like deprivation value and maintenance expenses.

You can purchase a vehicle, with the finance company owning the vehicle and hiring to you. They will be responsible for maintenance and own the vehicle at the end of payment duration.

This has the benefit of making it easy to switch to a new vehicle at the end of the agreement. It could be appropriate if a prestige vehicle is required.

Asset refinancing?

Asset refinancing for haulage can be an extremely valuable solution in your looking to redirect your cash elsewhere or have an issue with an existing finance agreement.

Essentially, a lender will pay off what you owe on your current financial plan and set up a new plan. This can allow you to release a substantial sum of money if you want to refinance a large fleet of vehicles and also spread out reduced payments over a longer period of time.

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