Absolutely essential to every scaffolding company is The Truck. The vehicle used to transport all the materials to and from the different sites and contracts a company is working on. It’s an obvious necessity. In this industry, you will need transport. That’s the easy part. The more difficult question can be knowing how to pay for it. Do you pay cash? Do you hire it? Or do you finance it? It’s great to have several different options available, but which one is the best for you and your business?
Different types of Finance
There are two agreements that are commonly used to finance a scaffolding lorry.
Lease Purchase – This type of agreement is set over a fixed term which can be a maximum of 60 months. The greatest benefit to you, is that as a business you will have full ownership of the vehicle at the end of the term. Another benefit to your business is that the lorry will appear on your balance sheet as an asset, which will help build credit for future funding requirements.
Finance Lease – As with the Lease Purchase option, a Finance Lease can be based on a maximum term of 60 months. With this facility, you will have the opportunity to keep the vehicle after 5 years for a calculated peppercorn rental (usually 1 month’s rental). Peppercorn rental is a lower, reduced or discounted monthly payment and is a common term used to explain ongoing arrangements after the term of the lease has ended. If this option isn’t required, you must sell the vehicle to a third party and retain between 95%-97.5% of the sale proceeds.
Timescale of arranging delivery of vehicle
So, you have decided which form of finance will best suit your business and budgeting requirements. When can you expect to take delivery of your new vehicle? From new, it can take up to 12-16 weeks for delivery, considering any modifications that might be required, including decal, protective flooring, internal vehicle racking and cab modifications.
If you are purchasing your vehicle used, the vehicle will be ready for delivery/collection from stock unless any specific modifications are required.
Benefits of financing vehicles
What are the benefits of financing your fleet? First and foremost, every vehicle (unless you are lucky enough to own a classic car) will depreciate. As the famous billionaire oil tycoon John Paul Getty famously said, “If it appreciates, buy it. If it depreciates, lease it.” When financing a vehicle, you are simply paying a fixed amount every month for an asset that is deteriorating in value, hence losing you money.
Another key benefit to financing your vehicle is you will have a fixed monthly payment throughout the duration of the term, allowing you to better budget for your business. Ownership of assets is often key to most decisions. Depending upon the finance agreement you choose, you will be given the option to own the lorry outright.
Lastly, but as important to every scaffolding business as the aforementioned, a lorry is a great marketing tool. A sign-written lorry will no doubt result in future business.
For more information, give us a call and speak to our leasing specialists on 01494 611 456.
Written by Carl Redding.