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Understanding Commercial Fleet Financing Options

Posted by Wilmar, Inc.


Commercial fleet financing options are channels you can use to acquire vehicles for commercial purposes. While it is easier for bigger shipping companies to get funding, SMEs have to look for more localized options. Here are some of them.

Purchasing Funding Options

These options will help you if you choose to buy your vehicles.

Financing the Purchase out of Working Capital

You may decide to finance your commercial fleet from the working capital. Simply put, you take some of the business money and buy some vehicles. While this may seem like a good idea, there are some considerations for small and medium companies. Dedicating a large chunk of working capital for vehicle acquisition translates to less cash for other business operations.

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Your business won't be able to bear cash flow pressure as a consequence. Using working capital to finance a commercial fleet doesn't make business sense because vehicles depreciate annually. The business may also lack money to fund the running and maintenance of those vehicles in the long run.

Car Dealership Financing

Another commercial fleet financing option is car dealership finance. Your local dealer can make payment arrangements via a finance company. In other words, you may acquire a vehicle through hire purchase agreements. 

The car dealership financing option sounds much better than financing the purchase out of working capital, but you need to understand what you're getting yourself into. You should know how many bucks you'll pay for the fleet over the stipulated loan period.

Although the terms allow for a specific repayment period, rates, charges, and fees can accrue over time. Therefore do your homework thoroughly before entering into a hire purchase agreement. Additionally, the financing company should define the warranty type and whether the total price includes any servicing commitments.

A Mortgage Extension

Extending your mortgage to acquire an extra vehicle for your SME fleet is totally legal, more so if you intend to keep it long-term. Talk of hitting two birds with a single stone. The interest rate is outstanding compared to other car financing options.

The only downside is that you may end up paying more than necessary for the vehicle as the broader mortgage commitment may swallow your vehicle installments. Paying higher interest for shorter periods is a bit better.

A Bank or Finance Company Commercial Fleet Acquisition Loan

The last option in this category is getting a bank or finance company to finance your commercial fleet. The bank may ask for some down payment on top of another security option before proceeding with the project.

Financing companies are a bit better because they will use the same rides as security. Just do your math and compare the interest rates, insurance costs, warranties offered, maintenance services, and other factors with other financing options before settling on one.

Leasing a Vehicle for your Business

Leasing is a cost-effective commercial fleet financing option put side to side with vehicle purchasing options. Leasing spreads the cost of the vehicle for the period you will use it as opposed to funding the total cost. Leasing companies have purchasing power since they buy a lot of cars.

Therefore, they will offer better prices. Depending on the type of vehicle you choose, they can provide access to telematics, insurance, and fringe benefits, toll costs, registration costs, tire replacement, management, and even liability costs.

There are two main vehicle leasing options.  

Operating Leases

Operating leases are similar to rental houses. You only pay for monthly lease payment for the period you will have the vehicles. The monthly payments are fixed, which makes budgeting for fleet costs easier. What's more, you return the vehicle once you're done without worrying about a replacement.

Finance Leases

A finance lease is a bit similar to operating a lease. You will make a monthly payment for the lease periods but have multiple options at the end. You can renew the agreement based on the vehicle's residual value, give it back and lease another, or purchase that vehicle at that diminished value.


Commercial fleet financing options include purchasing funding options such as mortgage extension, bank loans, and car dealership financing. Leasing offers better value for money. For more information about fleet financing options, please contact us, and we'll be more than willing to help.

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Topics: Fleet Financing, Fleet News, Misc


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