Skip to content

Asset Finance for Haulage Companies

Asset finance for haulage companies

Transport is big business and can be an extremely profitable industry to be part of. However, transporting goods around the UK and further afield involves expensive vehicles and changeable running costs, meaning that if business finance isn’t tightly controlled the fortunes of a haulage business can quickly look bleak. Understanding and correctly utilising asset finance for haulage companies can be a factor in the success or failure of an organisation, particularly for start-up transportation businesses. 

What Is Asset Finance? 

Briefly, asset finance is a way of purchasing essential business equipment. For a haulage company this would include vans and heavy goods vehicles (HGV’s) suitable for transporting the types of goods that are required to be moved by its customers. Vehicles of any type represent a large outlay, and many organisations do not have the cash available to make an outright purchase, and even if they did, using cash may not be the best option. 

There are different types of asset finance, each of which will provide fast access to the required vehicle(s) without the need for a large upfront payment. Options for asset finance include:

  • Hire purchase
  • Lease finance
  • Contract hire
  • Asset refinance 

We will discuss each option in more detail below, and how they can specifically help a haulage business to finance the purchase of HGV’s and other essential vehicles or equipment.

Hire Purchase for Haulage Companies 

Like traditional personal car finance, hire purchase is an option for businesses that need to invest in a vehicle. Hire purchase is a way of spreading the payments over a set period, an initial deposit is paid, followed by the monthly repayments, after the final payment is made the vehicle is owned by the company. Hire purchase is an excellent choice if your business wants to eventually own the vehicle however, you would be responsible for all maintenance and tax costs.

Lease Finance for Transport Businesses

Lease finance is a flexible option for haulage companies that would like to reserve the right to own the asset at the end of the finance period. With a lease finance deal the business agrees a set number of monthly repayments, a set-up that supports consistent cashflow. A residual value for the vehicle at the end of the term is calculated, and the business can choose whether to make that payment and own the vehicle, or whether to hand it back. Lease finance is more flexible where an organisation is likely to do higher mileage than is standard, a likely occurrence in a transportation business, but does incur more risk in terms of responsibility for maintaining the vehicle. 

Contract Hire

If your business has no desire to own the vehicle, contract hire may be a viable option. This type of vehicle finance allows you to rent a HGV or other vehicle for a set period, during this time you make set monthly repayments that also cover tax and can also include vehicle maintenance. At the end of the hire term the vehicle must be handed back, there is no option to purchase or keep it for longer. Benefits of contract hire are the set repayments and lack of risk, however, there are usually strict terms for mileage limits and the condition of the vehicle. As vehicles in the haulage industry are likely to be heavily used, and the requirements of business are constantly changing this may not be the most viable option. 

Asset Refinance 

Transport companies that have purchased their vehicles outright or used a form of finance that results in vehicle ownership, are fortunate in that they have assets that can be refinanced should the business require a cash injection. Asset refinance is raising cash against an asset that is already owned, or even partially owned. The amount that can be financed is dependent on the value of the asset, its condition, and the proportion owned by the business. Asset refinance is a type of secured loan, repayment terms are agreed in advance for ongoing financial stability. A drawback of this type of finance is that if your business fails to maintain repayments, the asset may be repossessed, meaning it is no longer available for use. 

Choosing Asset Finance for Transport Businesses

There are multiple asset finance options for haulage companies and choosing which one is most appropriate to your circumstances can be a difficult task. Utilising the services of a commercial finance broker is the best way to ensure that the finance taken meets your requirements. A broker such as MC Commercial finance, that can be contacted here, will look at your business set-up and requirements, and provide appropriate advice regarding which type of finance would be best. A broker can also search the market for the best deals, using their expert knowledge to advise which credit providers would most likely offer a good deal, and help you to complete the necessary application paperwork. 

MC Commercial Finance Ltd is authorised and regulated by the Financial Conduct Authority 
(Reg number 948719).
MC Commercial Finance Ltd is an independent credit broker not a lender.
Company Registered Number: 12472873