How your Commercial Asset Finance Broker can assist you.
As a business owner in New Zealand, you understand the smooth running of your daily operations depends to some degree on having reliable commercial vehicles to support your daily tasks.
Alongside being essential equipment, your company brand will likely appear on the side of your trucks, trailers, utes, machinery and any other vehicles you or your employees use during your work. So, the upkeep and timely replacement of your commercial vehicles is crucial to the public’s impression of your company.
Commercial vehicle loans are designed to assist businesses in acquiring necessary vehicles while easing the burden on their cash flow. When you need to expand your fleet or replace existing vehicles, you may be in for a significant outlay, so in this case, asset finance can be an invaluable financial solution.
Here, we will take a quick look at commercial vehicle loans, chat about a few available options, discuss who can get a commercial vehicle loan, and what documents you will need to supply to support your application.
Understanding Loans
A commercial vehicle loan could cover a fleet of trucks or cars, trailers, utes, a commercial bus, or any other vehicles useful for daily business operations. You may need an excavator, bulldozer, forklift, tractor, or refrigerated truck – basically, any vehicle used in service of your business can be classed as a commercial vehicle.
In New Zealand, commercial vehicle loans can be obtained from many different funders, including banks and specialised financial institutions. If you want to ensure you are getting the best terms, it pays to talk to an asset finance broker who understands all your options and is abreast of what is happening in the lending market.
Types of Loans
Term Loan
A Term Loan (also referred to as a chattel mortgage) is a common commercial vehicle loan in New Zealand. This arrangement means the lender provides the funds to purchase the vehicle, and then the vehicle becomes the security for the loan.
During the loan term, you can claim tax deductions on interest payments and depreciation, making this an attractive option for many businesses.
Finance Lease
A finance lease is a long-term monthly rental agreement with the option to purchase. You make fixed payments and can extend the lease or offer to purchase the vehicle.
Information Requested by Asset Finance Broker
You will be required to provide specific documents to support the loan application.
Commonly required documents include:
- Financial Statements: For any business asset or equipment loan, you may be required to supply your business’s financial statements to assess your financial health and ability to repay the loan. This will likely include balance sheets and profit and loss statements.
- Vehicle Information: Provide details of the commercial vehicle(s), machinery or equipment you intend to purchase, including make, model, and purchase price. This also allows us to ensure that there is no money owed by the vendor.
- Identification and Legal Documents: Lenders will need AML identification documents for all business owners, Directors and Shareholders over 25%. These may include a driver’s license and a second form of ID, such as a credit card or passport. A copy of the Trust Deed will likely be required if a trust is involved.
- Tax Confirmation: Depending on the loan, you may be asked for tax returns for the past few years to demonstrate tax compliance and income stability – or a brief e-mail from your Accountant confirming that all Tax and GST payments are up to date.
- Business Plan or Cashflow Forecast: A broker may request a business plan outlining your objectives and how the new vehicle(s) will contribute to your business growth; supplying this can strengthen your loan application.
Who Can Apply for a Loan?
Commercial vehicle loans are available to many businesses in New Zealand. It doesn’t matter what size your business is; if you need a vehicle to support the running of your business, you can apply for a commercial vehicle loan.
Business owners who need commercial vehicles for delivery, logistics, construction, or other industry-related purposes can all apply.
Evaluating the Best Commercial Vehicle Loan for Your Business
When you are ready to determine the most suitable commercial vehicle loan for your business, your Asset Finance Broker can add value to your decision-making process across:
- Loan Terms: Compare loan terms, including interest rates, repayment periods, and any additional fees associated with different financing options.
- Tax Implications: Assess the potential tax benefits associated with each loan type, such as deductions on interest and depreciation.
- Cash Flow Management: Analyse how the loan terms align with your business’s cash flow to ensure you can comfortably manage repayments.
- Vehicle Usage: Consider the specific needs of your business and the type of vehicles required. Choose a loan that best suits your usage and future growth plans.
The Application Process
When you engage an Asset Finance Broker, the application process for a commercial vehicle loan typically involves the following steps:
- Preparing Documents: Gather all necessary documents, as mentioned earlier, to support your loan application.
- Loan Application: Your Asset Finance Broker takes care of this.
- Credit Evaluation: The lender will evaluate your creditworthiness and assess the information in your application and documents.
- Loan Approval: Upon approval, your broker will contact you to review the loan terms and conditions before you accept the offer.
- Vehicle Acquisition: Once the loan is approved and loan documentation has been processed for payout, you can acquire your new vehicle(s).
Get in Touch
A commercial vehicle loan can be a valuable asset for your business, providing the means to acquire necessary vehicle assets while conserving your working capital.
Your Asset Finance Broker can assist you in connecting with the best type of commercial vehicle loans available for your circumstances. This will involve considering your business’s unique needs, the tax implications, and good cash flow management to determine the best fit.
By preparing the required documents and working with an Asset Finance Broker, you can confidently apply for a commercial vehicle loan for all your business vehicles and drive your business towards greater success and efficiency.
Contact the friendly team at GVK Finance to help you secure a loan, find the most competitive rates, and avoid hidden charges.