No matter what kind of business you run, chances are you need at least one commercial vehicle to keep your company moving. If you’re in construction, those vehicles might be of the earth-moving stock. In sales? You’ll need a fleet to make sure your team can close deals all across the country.
That said, most growing businesses don’t have the upfront capital to finance the purchase of these vital vehicles. That’s where commercial vehicle finance comes in.
We know that jumping into this world can be intimidating. After thirty years of helping Kiwi businesses grow, we also know that you’ve likely got enough on your plate without wading through documents piled to the margins with unhelpful jargon. So, in this blog post, we’re simplifying the ins and outs of traditional commercial vehicle finance.
Gear up with everything you need to find the right loan from the right place, all without hamstringing your business cash flow.
What is a Commercial Vehicle Loan?
Commercial vehicle finance is designed to let business owners like you buy vehicles of all different kinds for work. Unlike personal car loans, these are tailored to help you grow your business while keeping cash flowing, so they’re ideal for businesses in any stage of growth.
With a loan like this, your lender will provide the funds to buy the vehicle and you’ll pay them back over time. You’ll choose a term for the loan (i.e. how long you want to pay them back for) and a frequency (whether you want to pay monthly installments or more often).
A lot of the time, the vehicle you’re buying will serve as the collateral for the loan, which can reduce your interest rates and improve your loan terms. That said, if you prefer to access an unsecured loan with higher interest rates, there are plenty of options for this as well.
A Few Things to Know About Commercial Vehicle Loans
- There are different types of commercial vehicle finance, including finance leases, operating leases, and hire purchase agreements. Make sure to research these options and unpack which is best for your circumstances.
- Lenders want to make sure you can pay back your loan, so be ready to provide information about how long your business has been operating, what your revenue history looks like, and what your credit history looks like.
- Your loan terms will affect how long you’re paying your loan back for and what kind of interest rates you’re working with, so make sure to keep an eye on those to make sure you’re happy with the agreement you’re signing.
How to Apply for a Commercial Vehicle Loan
All of this information can feel intimidating, but it’s actually much easier to apply for commercial vehicle finance than you might think. Here’s the step-by-step process you can expect when applying, as well as one or two tips to help you navigate this without all the stress.
Step 1: Work Out What You Need
The most important thing to do is figure out which vehicle(s) you need, how much you can afford to pay upfront, and what type of commercial vehicle finance makes sense for your business. Consider what you can afford to set aside each month, whether you just need something short-term, or if securing the loan against the vehicle you’re getting is the best option.
When in doubt, work your options through with an expert. It’s worth taking your time at this step and asking for help when you need it, as this will affect your business’s financials for a while.
H3: Step 2: Gather Your Paperwork
If you have all of your paperwork ready, you can apply at the drop of a hat. In our experience, lenders usually ask for:
- Proof of business ownership
- Your asset records (profit & loss, balance sheet)
- Business’s bank statements (last 6 to 12 months)
- Details of the vehicle you want to finance
As you can see, it’s a lot like financing a personal vehicle, but with the added layer of business financials to add some slight complexity. Don’t worry, once you’ve got all of this paperwork sorted, the rest is fairly smooth sailing!
Step 3: Compare Your Loan Options
Make sure you don’t just go with the first offer you see; shop around for different loan providers! If you need help at this step, it makes sense to partner with a financial expert in the industry who can help you look for competitive rates, flexible terms, and options that actually match your business needs.
Step 4: Apply for Financing
Once you’ve found the right lender and finance type, all you need to do is submit your application with all the necessary documents, which you would have already gathered. Generally speaking, most lenders provide approval within a few days, but this can take up to a couple of weeks to hear back on.
Heads up: if you need help with the actual application process, partnering with a loan advisor like us can cut that paperwork in half.
Step 5: Get Your Vehicle and Go to Work
Once your commercial loan is approved, the funds are released, and you can secure your vehicle. Just make sure you’re clear on the repayment terms before signing. If you’re working with an advisor or partner, they can walk you through these to make sure nothing is confusing.
As you can see, this is a straightforward process. The toughest part is finding the right lender and understanding the terms you’re signing up for, both of which can be helped with a lot of research, or by partnering with an industry expert who can help guide you through.
We’ve been helping grow Kiwi businesses for 30 years. Now, it’s your turn!
At GVK Finance, we help businesses of all shapes and sizes access the commercial vehicles they need to get the job done. Whether you need a fleet for your team or a single vehicle to round out your equipment, we’ll help you evaluate and secure the right commercial vehicle finance for your needs.
Ready to get moving without cutting your cash flow in half? Get in touch with our team to find out if commercial vehicle finance is right for you.