Decide what you need
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VEHICLE FINANCE has always been a major problem. The pioneer road hauliers of the Twenties established themselves with war gratuities but new entrants today without substantial savings must have recourse to borrowing in one form or another.
The choices available—buying, leasing, renting, contract-hire and hirepurchase—are well known. How does an operator evaluate the pros and cons?
Hire-purchase is likely to involve a deposit or 20 per cent with interest at 7 per
cent—perhaps more—per annum over the repayment period of 24 months. It is more economic to finance vehicle purchase through a bank overdraft but banks prefer customers to use overdraft facilities for business trading rather than for the purchase of basic tools like vehicles.
Leasing is increasingly popular for the acquisition of vehicles and plant. Ownership of the asset vests in the leasing company but the operator has full use of the equipment so long as he pays his dues regularly. Leasing is not open to small firms with small resources.
Vehicle rental, usually for short periods measured in days or months, is increasingly popular, following American trends. Operators interested in this method must consider carefully the maintenance facilities of the rental firm. Some of the large rental people are international, offering the facility of taking over equipment in one country and surrendering or changing the type of vehicle or trailer needed in another.