Commercial Car Loans – Options You can Consider

commercial car loanAre you looking for a car loan that will suit your business, but not getting just what you want? You have come across so many options that you are overwhelmed about what is right and what is wrong. When it comes to car loans for businesses, there are some options, each of which is suitable to different requirements. So, it’s best to weight your requirements against the benefits of these options.

Commercial Hire Purchase

If your business can account for your GST, you can consider the option of CHP or commercial hire purchase. In this option, a lender accepts to buy the GST-included amount of a car on behalf of the borrower and hire it back to them for a certain period of time.

Benefits of this type of car loan are:

  • Fixed rate of interest
  • Flexible loan term
  • Flexible options of repayment, such as placing a residual value on the contract of loan
  • As the vehicle is collateral, interest rate is low
  • You are the owner of the vehicle as soon as you repay the loan

Chattel Mortgage

If you want flexible options for loan repayment, a chattel mortgage can be a good option. Here you can own the vehicle from the start of the loan agreement. The lender should invoice you for payment of the asset, thus offering you a great amount of flexibility regarding when and how you want to repay.

Rather than a fixed monthly installment, chattel mortgage allows you to select from a range of repayment options that may suit your cash flow. Some of them are:

  • Seasonal repayments
  • Trade-ins or deposits to lessen the total amount
  • Reducing interest charges and monthly installments by getting a GST refund entitlement (if it applies) paid in the loan
  • Balloon payment (paying a lump sum either at the start or at the end of loan term)

Finance Lease

This can be a good option for a car loan if your business wants to finance a luxury vehicle or the most sophisticated model. This is especially advantageous for purchasing luxury cars without needing huge amount of capital expenditure.

Some of the benefits of this option are:

  • Flexible terms
  • Costs known beforehand
  • Fixed rate of interest and monthly lease rentals
  • You can opt for tax deduction if the vehicle is used for revenue generation

You can choose to have bad credit car loans too, if your credit history is bad. So, if you are holding yourself back from opting for a car loan, you need not. Read more on who are specialized on bad credit car loans.

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