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Commercial Car Loan Or Finance Lease?
A commercial car loan is method of obtaining cars or vehicles for businesses without any money of its own. The business undergoes an agreement with the lender who buys the car on his behalf and then lends it out to the business in return of some interest or price. The arrangement is for a set period of time and requires the borrower to pay some pre calculated regular payments.
Commercial loans are similar to all other standard loans like personal loans, but they are specifically designed to meet the needs of the business users. You have the option of which vehicle you want to purchase and for how long you want the loan to last. This duration is mostly from 1 to 5 years. The lender will buy the selected car for your business and then loan it to you for usage. The business will then be required to pay back the loan in regular installments over a period of time. These installments consists of the vehicle value along with a certain amount of interest. At the end of the period, the borrower will get the ownership of the vehicle. It is ideally suited for businesses looking for buying cars without the money in hand. It is an affordable and convenient method that allows you to attain ownership through nominal payments spread over a period of time.
Finance lease is also a method of obtaining a vehicle without the required money in hand. It is a commercial agreement where the business chooses the asset to be purchased and the lessor buys it on its behalf. The same vehicle is then rented out to the lessee who uses it over a set period of time. In return the lessee pays a series of regular rental payments for using this asset. At the end of the period the lessee is given the option either to purchase the vehicle or discontinue the usage without the transfer ownership. The difference here is that in capital lease, the lessee will be required to pay some amount for purchasing the vehicle at the end of the period.
The choice or selection between the commercial car loans and finance lease is done by the business entity according to their needs and requirements. Keeping into consideration various aspects and features of both the methods, the most suitable one should be selected to obtain the vehicle.