Purchasing a light commercial van to set up a business as a contract delivery service is a very popular way for individuals to move into self-employment. Many companies contract out their delivery services and with online shopping still booming post-pandemic, there may be plenty of opportunities for new operators. The work prospects may be positive for self-employed owner drivers but there may first be obstacles to overcome when seeking sole trader van finance.
The prospect of becoming a van owner-driver can represent a relatively modest investment with the light commercial vehicle being the major requirement. But contract driver can be highly competitive with quite tight pricing from companies contracting out their work. Operators need to keep their ongoing expenses under control to ensure productivity and profitability.
To ensure profitability, sole traders need to secure workable finance for their van purchase. On first researching the van finance market for new businesses, operators may be disappointed to notice that many lenders do not offer finance for those just starting out. Some will have eligibility criteria which precludes brand new sole traders.
But there are lenders they do provide affordable and workable finance for these types of business set-ups through Low Docs and No Doc Vehicle Finance. Working through a finance broker rather than taking on the task alone can be faster, easier and deliver better outcomes. As a specialist business vehicle finance lender Jade Car Loans can assist new operators overcome the issues and secure affordable sole trader van finance. We are accredited with a vast selection of bank and non-bank lenders which provides us with more choices to source the finance which is best-suited to each of our customers.
With the RBA set to increase interest rates possibly several more times in 2022, the priority for most new operators will be to secure finance at the cheapest interest rate to support their operation through that very important first few years.
Sole Trader Van Finance Options
The two major issues confronting new sole traders seeking finance are the lack of financial records and business documentation and the length of time in business. These are two of the key criteria to be eligible for business finance with many banks and lenders.
To overcome both of those issues, we offer Low Doc and No Doc Vehicle Finance through our specialist non-bank lenders. This type of finance is not specifically a loan category but essentially a description of the business that is applying for the finance.
Docs is a reference to the financials which are usually required for the application. Low Docs means very little documentation is available and No Doc means essentially no records are available to support the application.
This type of finance is designed to suit the specific needs of operators that are starting a new business.
The essential requirements for Low Doc No Doc Van Finance include:
- Current ABN
From that basic starting point, applicants can improve their prospects of being made a cheaper interest rate offer with:-
- GST registration is not essential but can be viewed positively by some lenders. Businesses with turnover exceeding $75,000 pa are required to register for GST and submit Business Activity Statements accordingly.
- Sole trader holding a personal good credit score. As the business will be yet to establish its own credit rating, the credit profile of the owner will be assessed as part of application approval process. A better credit rating definitely contributes to better interest rate loans across the board.
- Supporting the application with even simply prepared figures of potential income and expenses. These may take the form of a business plan and may include contracts secured with customers with projected earnings.
- In conjunction with the assessment of the individual’s credit profile, an assessment of the owner’s financial situation may also be carried out. Paying down personal debts such as other loans and credit card balances prior to applying may contribute to a better finance offer.
Sole Trader Finance Conditions
While your Jade consultant will be working hard to achieve the cheapest rate and most affordable van loan, sole traders should be prepared for possible conditions on their finance.
Conditions for sole traders may include:-
- Lenders placing a limit on the finance amount which will be approved. While the sole trader may be seeking no deposit finance so they can borrow 100% of the van purchase price, they should be prepared for the possibility of paying a deposit or selecting a lower priced van.
- The term of the finance may also have conditions. While the sole trader may be seeking a longer finance term to achieve lower repayments to keep costs down in those initial first years, they should be prepared for a shorter finance term in some cases. Allowing for this contingency in the business plan may work to a faster outcome being achieved.
- Most business finance products are secured by the asset, in this case the van. With Low Doc and No Doc finance, additional security may be requested by our lenders. This may need to be provided by the business owner in the form of personal property or assets.
Finance Products Available
As mentioned above, Low Doc No Doc refers to the applicant not the actual finance product. When approved, sole traders may have their choice of finance product:-
- Sole trader loans for Cars
- Van Leasing
- Commercial Hire Purchase for Light Commercial Vans
The interest rates and tax deductible elements of each of these products do vary. Sole traders are strongly encouraged to engage with an accountant or financial advisor when selecting which finance product will work best with their individual set-up.
Overcoming Issues with Workable Outcomes
Working with Jade Car Loans has been proven over our many years in this field to achieve positive outcomes for many sole traders seeking finance. Your personal consultant will be working in your best interests and handling the negotiations with our lenders to achieve a low doc business car loan or a van finance outcome that works to support your new business objectives.
Contact Jade Car Loans on 1300 000 003 to discuss sole trader van finance for your new business.
DISCLAIMER: IN REGARD TO MISREPRESENTATIONS AND ERRORS CONTAINED IN THE MATERIAL AS PRESENTED, LIABILITY IS NOT ACCEPTED. THE DETAILS AND CONTENT IS PROVIDED FOR CAR BUYERS AND INDIVIDUALS AND BUSINESS SEEKING FINANCE PURELY AS GENERAL INFORMATION. THIS IS NOT PROVIDED AS THE ONLY SOURCE OF FINANCIAL INFORMATION. ANYONE THAT CONSIDERS THAT NEED FINANCIAL ADVICE ABOUT THEIR SPECIFIC REQUIREMENTS SHOULD SEEK THEIR OWN FINANCIAL ADVISOR.