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The types of business car finance

There are two different types of business car finance options. Each one has its own pros and cons but it’s up to you which one you choose. Just like any car finance option, you need to go through each one and determine the best one for your business needs and which ones you need to stay away from.

Balloon Payments

The first of the two options is through balloon payments. This business car finance option is when you pay small monthly payments towards the purchase of the car. At the end, you will be left with a final payment. This is known as the balloon payment and is often much larger than your regular monthly installments.

The downside is that you will have a larger payment but the benefit is that you have the time to save up for that payment. However, the balloon payment includes all the interest from the payment and often means that the payment is much higher than the actual value of the car.

Non-Balloon Payment

For a company that wants to limit the risk to the amount that they pay for the vehicle, this is the option to go for. With the non-balloon payment, you will pay in monthly installments, which do not change throughout the term. This works in a similar way to a hire purchase or a standard bank loan.

The benefit is that there is no higher payment at the end of the term and fewer risks. However, you will need to pay higher amounts each month than you would with the balloon payment option.

With both options, you will gain the title of the car so you have full control of what happens to the vehicle. You can sell it whenever you want to or you can keep it for years to come. It depends on your business circumstances over which business car finance option you choose and only you can decide that.

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