Advantages of paying cash for your vehicle:
Advantages of paying cash for your vehicle:
With a cash purchase, you are in a position to negotiate for better discounts. You have immediate ownership of the vehicle and you can also decide to sell or replace it wherever you want.
There are no additional fees to be paid when you pay cash. When you own a vehicle, it can be listed as an asset in your financial statements. And most important, all the profits you generate from the vehicle are your own. You don't have to share it with a financier.
When opting to pay cash for the vehicle, you have the option of using an overdraft facility which is better and easier than securing a loan.
The disadvantage of a cash purchase is that most of your savings and working capital go into paying for the vehicle. This reduces your opportunities to invest in other projects.
Instalment purchase: The advantages of an instalment purchase are that you only pay a certain amount as a deposit and then pay the remainder in small instalments. You can also pay the instalments using the same money you generate from using the vehicle.
One can also decide pay a bigger deposit and pay smaller instalments, depending on one's financial strength. You also get to use the vehicle immediately.
Depending on your credit record, you can also negotiate not to pay a deposit. Since the contract is fixed, the financier cannot terminate the agreement or reduce the payment period.
There is a chance of paying less if you decide to pay off the debt sooner. Because of the fixed instalment, you can budget better.
The disadvantage of an instalment purchase is that you only become the owner once the debt is paid. You can also not sell vehicle because the ownership papers belong to the financier. Interest and bank charges make the vehicle more expensive. You are expected to pay instalments on a given date or you get into arrears.
Lately, many fleet owners or operators choose the lease option rather than owning vehicles:
Just like any form of purchase, leasing also gives one full and unrestricted use of the vehicle as if it was bought.
There are many options to choose from under the lease contract. When the lease contract expires, you can choose to own the vehicle or replace it with a new one. You also have the option of extending the lease for the same vehicle.
One good thing about the lease purchase is that it can be tailored to suit individual needs of operators. You also choose whether you pay cash or trade in your car as an initial payment. Upfront payment is not compulsory. Payments are also fixed and the financier cannot change them.
The problem with leasing is that the ownership of the vehicle always remains with the lessor. The realisation of the residual when the lease expires also resides with you. Tax, if any arises, is also your responsibility.
Having heard about these various options, the onus is on you to decide which one suits you best.
You need to come up with a very sound strategy if you want to succeed in any transport operation.
Many ways to pay for vehicles
Advantages of paying cash for your vehicle:
Advantages of paying cash for your vehicle:
With a cash purchase, you are in a position to negotiate for better discounts. You have immediate ownership of the vehicle and you can also decide to sell or replace it wherever you want.
There are no additional fees to be paid when you pay cash. When you own a vehicle, it can be listed as an asset in your financial statements. And most important, all the profits you generate from the vehicle are your own. You don't have to share it with a financier.
When opting to pay cash for the vehicle, you have the option of using an overdraft facility which is better and easier than securing a loan.
The disadvantage of a cash purchase is that most of your savings and working capital go into paying for the vehicle. This reduces your opportunities to invest in other projects.
Instalment purchase: The advantages of an instalment purchase are that you only pay a certain amount as a deposit and then pay the remainder in small instalments. You can also pay the instalments using the same money you generate from using the vehicle.
One can also decide pay a bigger deposit and pay smaller instalments, depending on one's financial strength. You also get to use the vehicle immediately.
Depending on your credit record, you can also negotiate not to pay a deposit. Since the contract is fixed, the financier cannot terminate the agreement or reduce the payment period.
There is a chance of paying less if you decide to pay off the debt sooner. Because of the fixed instalment, you can budget better.
The disadvantage of an instalment purchase is that you only become the owner once the debt is paid. You can also not sell vehicle because the ownership papers belong to the financier. Interest and bank charges make the vehicle more expensive. You are expected to pay instalments on a given date or you get into arrears.
Lately, many fleet owners or operators choose the lease option rather than owning vehicles:
Just like any form of purchase, leasing also gives one full and unrestricted use of the vehicle as if it was bought.
There are many options to choose from under the lease contract. When the lease contract expires, you can choose to own the vehicle or replace it with a new one. You also have the option of extending the lease for the same vehicle.
One good thing about the lease purchase is that it can be tailored to suit individual needs of operators. You also choose whether you pay cash or trade in your car as an initial payment. Upfront payment is not compulsory. Payments are also fixed and the financier cannot change them.
The problem with leasing is that the ownership of the vehicle always remains with the lessor. The realisation of the residual when the lease expires also resides with you. Tax, if any arises, is also your responsibility.
Having heard about these various options, the onus is on you to decide which one suits you best.
You need to come up with a very sound strategy if you want to succeed in any transport operation.