Q If I were to buy a vehicle at a cost
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of f2,000, with a deposit of 25 per cent how would I incorporate this in operating costs?
AWhen dealing with the cost of operating
a commercial vehicle as set out in the COMMERCIAL MOTOR Tables of Operating Costs, allowance is made under the item of "Interest" for an appropriate charge to be made in respect of this expenditure.
Taking a random example, the 8-tonner shown in Table 2 of the current edition of the Tables is estimated to have an initial cost of £1,975 and allowing for a rate of interest of 74 per cent, the equivalent interest charge per week is £2 19s. 3d.
In including interest as a standing cost it is considered that if a haulier had this amount of £1,975 previously invested then, until he has earned at least the equivalent of the interest he would have surrendered when he purchased his vehicle, he cannot be said to be earning a profit.
However, the reason for including interest as an item of operating cost as just explained should not be confused with any hire purchase arrangements which a haulier may enter into when purchasing his vehicle. Where such an arrangement is in force the capital repayments correspond to a contribution to savings, while only the interest proportion of a hire purchase repayment could be considered an item of operating cost.