Keep on trucking with AIB Finance and Leasing

Financing and upgrading a commercial fleet is one of the biggest overheads for any company, often putting a burden on cash flow. However, a modern commercial fleet is vital for most businesss, but particularly for those operating in the commercial haulage sector.

In today’s competitive business environment, it is vital that a business makes the most of its financial resources. In purchasing a new fleet, it is important to consider the most efficient way of financing such an investment. There are a number of sources of funding available, each of which may be appropriate in differing circumstances. These include existing cash reserves, loans; hire purchase or asset finance and leasing. For many companies, leasing has proved to be one of the most attractive forms of vehicle finance available.

AIB Finance and Leasing is Ireland’s largest asset finance company, providing motor, transport and equipment finance to businesses throughout Ireland. It has one of the most flexible, attractive and comprehensive finance package in the marketplace, offering a full range of leasing and purchase plan finance options for every type of commercial fleet from light vans to large heavy goods vehicles.

What is Leasing?

As a type of asset finance, leasing has many of the advantages of hire purchase and may be more tax efficient. With leasing, AIB Finance and Leasing, purchases the vehicle and leases it back to the customer for an agreed number of payments over a fixed period. This is generally between two and five years although some lease arrangements can be for up to 7 years, depending on the type of commercial transport being purchased. Up to 100% finance of the cost of the vehicle may be available and repayments are fixed on a monthly, quarterly, half-yearly or annual basis. Flexibility is a key feature of AIB’s transport financing. Businesses can select the repayment period which best suits their business cashflow cycle.

“AIB researches the company’s vehicle financing needs by meeting with the customer face to face. We take time to understand the nature of the customer’s operations so that the financing facilities are precisely tailored to the particular circumstances and needs of each customer,” says John O’Mahony, Managing Director of AIB Finance and Leasing.

Advantage of Leasing
The advantages of leasing are many but for most businesses, the principal advantage is that of being able to update the fleet when required, rather then having to wait until adequate reserves are available to invest in new vans or trucks. Leasing the new vehicle means that a company does not have a large capital outlay, which frees up capital for more productive uses.

Leasing is a tax efficient form of finance as the payment may be 100% claimable as a revenue expense in the Profit and Loss account, depending on the customer’s tax position. In addition, where the business is registered for VAT, it can reclaim VAT which is charged on all lease rentals.
In some cases it is also possible to use leasing to raise cash against existing assets. This involves a company selling the asset to the finance house and leasing it back over an agreed timeframe. This may be a more efficient and cheaper method of financing expansion plans.

At the end of the leasing agreement, there are a number of options available to the customer. The business can continue to lease the goods for a Secondary Leasing Period for a nominal amount per annum or it can trade-in against a new vehicle, thus reducing the cost of a new lease. The business also has the option of selling the van or truck to an independent third party, although this option may create a tax liability. Professional advice from the customer’s accountant should be sought in deciding which option to choose.

Further Information

AIB’s team of finance and leasing specialists are based at all AIB Bank branches so a customer can arrange to meet their finance and leasing specialist at any time. For further information contact your local AIB branch or AIB Finance and Leasing directly on 1890 474747.