Vehicle Finance

How Vehicle Finance Works

The commercial vehicle finance process is simple:

1. Find a commercial vehicle that you want to finance,
2. Note the value of the vehicle,
3. Decide how much of a deposit you want to put down. 10% is usually a good start. The lower the deposit, the more you have to finance, and the higher the overall cost of the vehicle will be.
4. Apply for finance through a platform that can help you compare different commercial vehicle finance quotes.
5. Decide on the best finance, based on repayment period, pricing and how it suits your business.
6. Close the deal and finalize the details with the lender.

Do I Need a Vehicle First?

No.

You can apply without having a vehicle in mind, and see how much finance you can get.

This will allow you to then shop around in the right price bracket.

Lease to Own

There is another type of vehicle finance available which is referred to as a lease-to-own deal. This means that you pay for the vehicle monthly, and then only own the vehicle outright once you have paid your last monthly instalment.

A lease to own structure means that you are unable to write the depreciation of the vehicle into your books, but you can list the monthly repayments as a tax-deductible expense.

It also means the vehicle does not appear on your books, and the loan is not listed as a liability.

Why Apply Through FundingHub and Not With the Dealer?

FundingHub allows you to compare quotes, and our service is free.

Instead of relying on your dealer to give you just one quote, we fetch multiple vehicle finance quotes for you and let you choose the best one.

It's the best way to get vehicle finance.

What Types of Vehicles Can I Finance?

In short, FundingHub is able to help you with many different types of business and commercial vehicle finance. Here are some things you can finance:

• General business and staff vehicles,
• Motorbikes & scooters
• Light delivery vehicles,
• Minibuses,
• Large and specialist commercial vehicles.

Supplier vs Private Buyer

We do finance for both.

Vehicle Refinance

If you've got a commercial vehicle that you would like to refinance, we can help.

Refinancing a truck or car is a great way to unlock cash that you need to operate.

Can I finance a truck?

Yes, as long as you meet the minimum qualifying criteria.

Do banks finance commercial trucks?

Some of the big banks will consider commercial trucks, however, there are more specialist financing institutions which will be able to assist with large, speciality commercial vehicles.

What about yellow metal equipment?

For yellow metal, equipment finance may be a better bet.

Vehicle Finance Costs

The costing of a vehicle finance loan is simple. It is made up of two components:

1. A deposit, or downpayment,
2. A monthly repayment made up of interest and capital repayment.

Deposit

The minimum deposit required for a vehicle finance loan is generally 10% of the value of the vehicle. This will be required to be paid in cash upfront.

Some lenders may not require this downpayment, depending on your credit record.

Monthly Repayment

Your monthly repayment is comprised of both:

1. Your interest repayment (the cost of the loan), and
2. The capital repayment (the money you borrowed).

This is usually due monthly in advance.

Interest Rates

Interest rates for commercial vehicle finance generally range from prime lending rate (currently 7.5% in South Africa) to prime plus 10%.

You should be wary of interest rate beyond 20%. This likely means you are dealing with a lender which does not have your best interests at heart.

Repayment Period

You can finance a vehicle from a minimum of 6 months, to a maximum of 72 months.

The period of repayment will generally affect your interest rate.

As a general rule, the longer you finance a vehicle over, the more it is going to cost.

Residual Payments

Always be aware of a clause in your vehicle finance that stipulates a residual payment. This can be a big cash flow drain for your business if you are not expecting it.

A residual payment means that your monthly loan repayments are lower, but at the end of your repayment term you owe a big lump-sum of cash to cover your 'residual'.

The reason for a residual is that generally the residual payment should equal the value of your car at the end of the repayment period. That way, it's assumed that when you trade your car in, the cash from the sale of your car will cover your residual. However, that leaves you without a deposit for your new car. It is a dangerous cycle to get into and residual payments are not recommended for first-time financers.

Documents Required for Vehicle Finance

The documents you need on hand for vehicle finance will include:

• Business registration document
• 6 to 12 months bank statements
• Director's ID document
• Proof of address
• Tax compliance documentation

These may vary from lender to lender, but this is a good base to work from.