Car finance for businesses
The preservation of working capital and taxation benefits are two big draw cards for businesses looking to finance staff vehicles.
Companies the world over are often faced with the costly requirement for staff cars. However, with the number of financing options on the rise, many business owners are turning to funding these purchases rather than paying cash.
Financing, rather than buying outright, enables businesses to take advantage of two key benefits: greater control of cash flow and working capital, as well as various tax benefits.
“The preservation of working capital is a key benefit for business owners when comparing financing against paying cash for staff vehicles,” says Cristian Fedrigo, National Sales Manager, Leasing and Personal Loans at AFG.
“A business owner needs to consider whether their working capital is better spent on other aspects of the business, such as paying debtors, advertising or even purchasing more inventory.
“Some businesses may even be able to invest working capital and achieve a rate of return that exceeds the interest charges associated with financing,” added Fedrigo.
The taxation benefits associated with financing staff vehicles] is another key reason why businesses are turning to financing options. Of course, there are many different types of finance, each offering different tax benefits, as well as the luxury tax threshold to consider, so expert tax advice is strongly recommended.
“In certain circumstances, the financing of business assets provides a business owner with an opportunity to claim various tax deductions, such as rental payments, interest payments and depreciation, thus minimising the amount of tax payable,” says Fedrigo.
Going down the financing route can be cost-effective, and with expert advice it can also be pain-free when it comes to paperwork. Fedrigo says that some businesses can arrange finance for a vehicle without the need for financial statements.
“With a standard application taking no more than 20 minutes to complete, we see motor vehicle finance as an integral component in providing a holistic, comprehensive service to our customers,” he says.
“What’s more, with interest rates at all-time lows, the decision between paying cash and financing business assets should be an easy one.”
FinanceCorp finance managers specialise in commercial and equipment finance, and can make car finance simple. Find one here.