Most companies would need auto finance loans that are used to buy vehicles for the progress of the business. Vehicles majorly used for various duties be it making deliveries, transport materials or may be vehicles for staff members, are not financed like other personal cars. There are several ways used to do this kind of auto finance. The most common and economical way to acquire the finances is by secured loan with the vehicle itself serving as collateral.
Other ways include credit financing, equity financing, the unsecured loan, or car leasing. All these ways except leasing and unsecured loan put the car at great risk of repossession of the car if payments on commercial vehicles are not made in time. Lease is the most expensive way of commercial auto finance. The moment leasing period lapses the leaser has an option of buying the car and having the lease payment go the buying price. For the leaser to own the car he must calculate the difference of the amount he has paid to the price of the car set by the leasing company.
Before going to the auto finance for commercial vehicles, a buyer needs to follow certain procedure. The first requirement is verifiable proof of income of the buyer. The buyer must give a valid postal address as well as provide a clean driving license. The credit score of the buyer also is incredibly important. The buyer must submit documents like tax returns and bank statement for verification. The lender must also consider credit rate. This will be known by the buyer’s past credit history, this will be used to determine which interest rate is fit for the buyer.
A poor credit score will increase the interest rate or may cause the auto finance loan to be refused completely. You will also find out that the type of the car is another determining factor. They would want to know if the car is used or new and the estimated value of the vehicle. Another important question is the amount of time the buyer wishes to have to pay back the loan.
For anyone who wants to take auto finance through unsecured loan, the there is no risk of repossession but it comes with high price. The interest rates include both variable and fixed. A variable rate will follow the trend in the market. As with fixed, it will remain fixed all through the repayment of the loan. The greatest risk in auto finance of commercial vehicles is the risk of having the vehicle repossessed if the buyer defaults on the loan.