Transport & Logistics Finance – Why?

Demystifying Asset Finance in the Transport Sector.

transport logistics finance

Transport & Logistics Finance – Why?

According to Global Industry Classification Standard (GICS), transportation is a subgroup of the ‘Industrials’ sector. Incorporating several industries such as road, rail, logistics, marine, and air freight, it can also be broken down into smaller microcosms such as; trucking, marine port operations, postal and courier activities as well as warehouse storage and handling.

As transportation has continued to grow, so has its dependents. Now a key component of society and a key earner for the British economy, it is important that transportation is holistically supported in its operation and development.

Asset Finance in its simplest form, is a tool that supports and transforms transport businesses by enabling them to stay ahead of trends, changes and predictions. As an alternative method of funding, Asset Finance provides flexibility for businesses that wish to invest in themselves or simply rediscover a healthy cash flow.

Asset Finance Products:

Description:

Why do businesses choose this product?

Hire Purchase

Hire Purchase (HP) is simply a hire agreement which offers a straightforward way of spreading the cost of your vehicle or company asset, with the benefit of ownership at the end of the agreement.

You decide:

  • The length of your agreement.
  • How much deposit you wish you pay.
  • Your preference of fixed monthly instalments.

At the end of your agreement once you have made your final monthly repayment including a nominal Option to Purchase Fee, the title of the asset will be transferred into your name.

  • Flexible deposit to conserve your personal or business cash.
  • Fixed monthly payments for ease of budgeting.
  • Ownership at the end of the agreement.
  • No mileage restrictions.
  • Fixed interest rate.
  • Monthly repayments do not attract VAT.
  • Tax allowances for business users.
  • Option to defer a final lump sum to reduce monthly repayments (Lease Purchase).

Refinance

Refinance can be a useful way for an individual or business to restructure existing finance agreements.   

The asset is purchased by a new finance provider and refinanced on a new agreement.  The duration of the agreement and repayments can be tailor made to suit your individual requirements, resulting in a lower monthly payment, whilst still providing use of the asset.

Refinance is available on vehicles and assets which are currently financed.

  • Provides further financial stability.
  • Restructure monthly repayments.
  • Ability to purchase additional assets.
  • Flexible terms available.
  • Agreement is secured against the asset value.
  • Viable alternative to traditional banking options.

Operating Lease

Operating Lease is a common form of ‘off-balance sheet’ financing, it enables you to equip your business with a broad spectrum of high value assets or equipment through a rental agreement, reducing any of the attached risks of ownership and costs to your business. 

With an operating lease your monthly rental payments are based on the difference between the price of the asset at the start of the agreement and its projected residual value, plus any interest charges.  As you only repay a proportion of the asset’s value, you avoid a large initial outlay, reduce your monthly rental payments and instantly boost your business cash flow.

At the end of the lease you simply return the asset to the lender, alleviating any of your disposal and depreciation concerns.

  • Fixed monthly rental - you acquire the asset for immediate use.
  • Low initial capital outlay.
  • Boosts your cashflow.
  • Asset usage without resale or depreciation risk.
  • Off Balance Sheet Funding - Operating lease acts purely as a business rental cost.
  • VAT on rental is reclaimable depending on your usage & VAT Registration.
  • Flexibility at the end of the term to return the asset or extend the lease agreement.

 

Lease Purchase

Lease Purchase also known as Hire Purchase with a Balloon, is similar to a standard Hire Purchase (HP) finance plan.  However, your monthly repayments are reduced by deferring a proportion of your balance, a balloon payment, to the end of your finance agreement. 

Lease Purchase is available to business customers and private individuals.  It helps you spread the cost of your asset with lower monthly payments to suit your budget, with the option to purchase at the end of the agreement.

At the start of the agreement you simply decide an initial deposit, typically 10%–50% of the purchasing price and choose your agreement term usually between 12–60 months. 

Your equal monthly payments including interest payable, and a final agreed deferred balloon payment are then calculated.

At the end of the agreement you then have a number of options.

You can choose to either:

  • Pay the deferred final balloon payment, plus an Option to Purchase Fee, the title of the asset will then be transferred into your name. 
  • Part-exchange the asset subject to settlement of your existing credit agreement. 
  • Refinance the final balloon payment.
  • Sell the vehicle or asset privately, once the balloon payment has been paid.
  • Flexible deposit and term with no mileage restrictions.
  • Fixed monthly payments for ease of budgeting and to conserve your cash flow.
  • Ownership at the end of the agreement.
  • Deferred balloon payment reduces your monthly instalments.
  • Tax allowances for business users.
  • Asset appears on business balance sheet and can be wrote down against taxable profits.
  • Monthly repayments are not subject to VAT.

 

 

Asset Finance can be used for:

Working Capital/Cash Flow Solutions

Finance solutions, such as Commercial Loans, can be used to help cover the financials involved in everyday operations such as bills and rent. This can be especially beneficial to businesses that are having to invest in other areas, or for seasonal businesses that are busier in some months more than others. Other forms of Asset Finance such as; Operating Leases, Contract Hire and Seasonal Payment Plans can also help to protect your cashflow and promote a healthy working capital. 

Expansion

Growth is vital for successful businesses that want to achieve operational excellence and Asset Finance can help businesses to achieve this. Expansion can take the forms of; hiring new employees, becoming a franchise as well as expanding your premises. If you have the desire to grow your business, discuss your options with Chatsbrook on 01603 733500.

Renovation and Equipment

In recent months, there has been further pressure for the transportation sector to align itself with global targets and to implement contemporary devices in order to achieve optimum efficiency and productivity. The growth and proven assistance of AI, as well as the shift to cleaner models of transport, means that there is now a requirement to invest in the UK transport Industry. With the support of Chatsbrook, you can achieve customised solutions based on company-specific requirements.

The flexibility of Asset Finance enables our clients to grow exponentially…

Typical Assets that we can finance are:

  • Drawbar Vehicles
  • Rigids
  • Trailers
  • Tankers
  • Curtain Siders
  • Specialist Vehicle / Recovery Vehicles
  • Buses & Coaches
  • Vans (LCV’s)
  • Forklifts

(This list is not exhaustive, we offer specialist car and technology finance for businesses in the transport industry too.)

Why choose Chatsbrook?

Operating business with a live network of productive contacts, such as leading UK and world-renowned lenders, Chatsbrook is a well-supported business that is proud to connect transportation businesses with lending opportunities that are both unique and affordable. Our proven expertise in tailored financial services, as well as our solution-focused approach, has helped to support thousands of individual clients and businesses up and down the UK.  

“Chatsbrook aim to make the process of getting finance as seamless as possible- enabling our clients to focus on running their business. We get to understand the workings of a business, which helps us to tailor products to be most suitable for their growth. Talk to us on 01603 733500 about expansion, renewals and replacements of equipment, or how we can aid your cash flow by releasing equity from unencumbered assets”- Chris Hudson, Business Development Manager for the Commercial and Haulage sector.


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