Advances on Asset Values Only
Page 57
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Conditions on Which Transport Unit Finance, Ltd., Will Buy Transport Units on Behalf of Tenderers A DVANCES will be made by Trans1-1 port Unit Finance, Ltd., to purchasers of transport units only on the value of the assets to be acquired. The value attributable to special A licences will not be taken into account.
Each case will be examined on its merits, having regard to the applicant's experience in the industry and to his future prospects. Where he can oiler no security other than the transport unit, T.U.F. will generally be willing to put up two-thirds of their estimate of the units worth or an independent valuer's figure. In some instances, where the customer is willing to give the company a charge on his existing assets, they may pay a much larger proportion of the cost, or even the whole of it.
Joint Sponsors The T.U.F. organization was set up by the United Dominions Trust, Ltd.,. and the Road Haulage Associaton to finance the purchase of transport units. In the December issue of The Road Way, the official organ of the R.H.A., Mr. H. D. Oliver, a director of the company, explains the method of working.
He quotes an example to indicate the support that a buyer might expect from T.U.F. If a haulier proposed to offer £8,000 for a unit and the vehicles were valued at £6,000, he could expect to he advanced £4,000 (two-thirds of £6,000) and would have to find £4,000 (half the tender).
"This may seem a high deposit," says Mr. Oliver, " but, on reflection, you will realize that it is in the best interest of the industry itself that 4 men of straw' should not be encouraged to enter it."
The period over which payment may be spreadwill depend largely on the age and condition of the vehicles and on the kind of traffic for which they are to be used. The average period is likely to be about three years. Where the unit includes real property, repayment of any loan secured by a mortgage on it can generally be spread over a longer period than that allowed for the hirepurchase of vehicles.
41 per cent. Interest The rate of interest is 4+ per cent. flat where 12 monthly payments are to be made and is proportionate for other periods or intervals of payment. This rate applies also to a unit which includes real property.
Anyone who wants to borrow money from T.U.F. for the purchase of a transport unit must complete a form, "Enquiry for Terms," entering particulars of the unit required, the price proposed and the amount offered as a deposit. Generally, the applicant will have to have the vehicles and property valued by Messrs. Goddard and Smith and pay for the valuation. If several customers are interested in the same unit, only one valuation will be made and the cost will be divided equally among those who gave instructions for it.
Mr. Oliver gives three reasons for requiring a valuation. One is the uncertain proportion of the tender price which will be attributable to the benefit of the special A licences. The second is the unpredictable effect of sales of transport units on the commercialvehicle market as a whole.
The third is the difficulty of assessing the amount which it is possible for the company to contribute towards the cost of such rapidly depreciating assets as vehicles, when the period over which the customer will pay for them is to be as long as the removal of the restriction imposed by the Hire-Purchase Control Order, 1952, now permits it to be.
If the applicant decides to proceed with the purchase, the tender must, to satisfy the law on hire-purchase, be made by T.U.F. If the British Transport Commission accept the tender, the
vehicles in the unit will be let to the haulier under a hire-purchase agreement. Where the unit includes premises, the title to them will be transferred to him and the company will take a mortgage to secure any advance made on them.
Before the tender is submitted, the haulier must give the company a banker's draft for the amount of the deposit. Once the tender is accepted, the company will have to buy the unit, even if the haulier has changed his mind.
T.U.F. as Purchasers
T.U.F. will become the purchasers to whom, under the Transport Act, 1953, a special A licence is to be granted. They have to apply to the Licensing Authority for this licence to be revoked at the moment of granting it and, at the same time the haulier on whose behalf the unit has been bought has to apply for a new special A licence. In practice, the process is entirely automatic.
Transport Unit Finance, Ltd., are, of course, not the only finance house offering credit facilities for the purchase of transport units. Among others are Midland Counties Motor Finance Co., ,Ltd., Mapping Buildings, Norfolk Street, Sheffield. I.