Given the high cost of commercial vehicles, buying secondhand can be appealing. However, it can be a false economy if the asset proves unreliable. Finance options can help you manage your cash flow to get all the benefits of a new vehicle.

Deciding on a new vehicle

When considering adding another vehicle, truck, trailer or bus to your fleet, it’s important you carefully consider what makes a good investment for your business.

Firstly, you need to decide what you want. When choosing a vehicle, things to consider could include:

  • past experience with a model
  • the reputation of the manufacturer (it's worth checking the ANCAP and used car safety ratings)
  • any special offers available
  • ease of maintenance
  • whether a vehicle meets the specifications required for your contracts and industry.

Secondly, you need to consider what you can afford: are you planning on buying the asset new or secondhand, and how will you finance it?

New versus secondhand

For businesses buying their own vehicles, a good price through a private sale agreement may look like an attractive option. This is particularly the case in uncertain business times, when you might be able to secure the asset at a heavily discounted price.

However, paying for the asset upfront could still strain your business cash flow and mean you have less working capital available to explore growth opportunities.

You could also run into warranty and reliability issues with a secondhand vehicle. Should you need to do repairs out of warranty, you'll have to wear those costs. You may also run into cash flow problems through lost sales in having the asset off the road.

Equipment Finance Manager (Vic/Tas) Rachael O’Hayon cites a customer who was reluctant to pay for new equipment because they thought it would be too expensive.

“It was a bit of a false economy because they were paying a lot more on repairs and maintenance to keep the existing fleet on the road,” she says.

O’Hayon explains that upgrading a fleet can be cost-effective and deliver bottom-line benefits – new vehicles look good and are more reliable. These factors build the brand and boost employee engagement whilst enabling a better customer experience.

Commercial vehicle finance options

At NAB you can apply for vehicle finance in the following ways:

Your business banker can talk you through your options to help you decide on the finance solution best suited to your circumstances. They can also help you structure your finance in a way that helps you manage your cash flow.

You may decide to keep your monthly repayments low by adding a balloon payment at the end of your loan or lease term. This could enable you to keep more money in your business for growth and running costs. You may also be able to on-sell the asset at the end of your loan or lease term to clear this debt.

Vehicle finance offers many advantages. You can:

  • borrow the total purchase price
  • use the asset as security for the loan
  • tailor the loan term to the usable life of the asset
  • take repayment holidays should your business be seasonal
  • make tax deductions with some finance options.

With NAB, you can choose from a range of options and a variety of lease terms. Speak to a banker to thoroughly explore your options and the implications for your business.

Important information

The information contained in this article is correct as of July 2018 and is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.

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