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Car finance is one of those things that many of us are aware of, but that we might not have necessarily taken advantage of, or even given much thought to, until the cost-of-living crisis arrived.
The fact is, financing a car has been a popular and relevant option for both individuals and businesses since long before the current time of high inflation and economic slowdown. According to data published by Statista, more than two million cars were purchased on finance in the UK in the 12 months up to September 2021.
Of those two-million-plus cars, most were bought by consumers; however, it is notable that almost 400,000 of them were purchased by businesses.
That statistic might be a cause of surprise to some observers. After all, aren’t we now firmly into the ‘post-COVID-19’ era in the world of work, in which businesspeople largely use Zoom to communicate instead of (ahem) “zooming” down the roads in cars?
Such a perception would, of course, be a simplification of the true situation. There are definitely a lot of businesses out there that continue to stand to benefit from car finance – and here are a few examples of the types of business we mean.
Which Types of Businesses Would Benefit From Car Finance?
Sole traders
The short answer to the question, “which types of businesses would benefit from car finance?”, is “all of them!” There are car finance options for any size business, small or large, through a wide range of reputable brokers and lenders, so your own firm might benefit from car finance even if you are presently convinced that it wouldn’t.
But of course, simply saying “all of them” would make this article a very short one, so let’s focus firstly on sole traders. This category of business covers self-employed people, freelancers and the very small ‘one-man band’ businesses that might not exactly have a lot of cash behind them just yet.
Picture, for example, the typical ‘plucky’ entrepreneur. Such a person might need a business vehicle in order to fulfil their day-to-day business duties or visit potential or current clients, but they might not be able to afford to pay the entire cost of a vehicle upfront.
In that situation, an affordable car finance deal – enabling them to pay for the car’s use in manageable monthly payments over a loan term of potentially years – could be an ideal arrangement for them, as they look to keep their month-by-month expenditure streamlined.
Small, independent businesses
By this, think of your typical high-street customer-facing business, such as a bakery, restaurant, or independent retailer; this type of small business might need a car, or several, in order to transport supplies and deliver goods each and every day.
But again, such a firm – especially a young one – might not be in a position to buy a car or van paying the entire cost straight away, and even if it is able to do so, such a path might not make a huge amount of sense. If you run such a firm, for instance, you might like the flexibility a car finance agreement could give you to exchange your vehicle for a new one once the loan term comes to an end, thereby meaning you can always be driving a relatively new car or van.
Such a business might even require an entire fleet of vehicles, which is something else that would be fiendishly expensive if you were to depend on simply buying the cars or vans with upfront cash. Again, car finance could be great for minimising your monthly financial burden here.
B2B firms
Google “what is a B2B business?”, and you will find an Investopedia link defining B2B, which stands for business-to-business, as “a transaction or business conducted between one business and another, such as a wholesaler and retailer”.
So, we aren’t referring here to a local corner shop serving individual customers. B2B firms are instead those that tend to be lower down the supply chain – if, for instance, you are a digital marketing firm providing services to a hotel business that seeks to promote itself more effectively online to potential guests, this would be a B2B arrangement.
And if your company is a B2B one, yes, you could do a certain amount to build relationships with potential clients and partners through the likes of email and video-conferencing software… but even this highly digital approach would only go so far. You might still want to have a company car that you can hop into, so that you can go and visit these other firms ‘in person’ and establish a face-to-face rapport with them.
So, yes, B2B firms, as well as B2C ones, could certainly benefit if they were to land a suitable car finance deal for their circumstances and needs.
Business car finance, then, isn’t a specialised solution of relevance to only a very narrow subset of firms; it really could be a useful and interesting option for almost every type or size of business.
