Obtaining vehicle finance in an economic downturn is often perceived to be difficult for transport operators – but is that really the case? To put the matter into perspective, Andre van Eeden, regional sales manager for Scania Financial Services, answers some frequently asked questions
How easy or difficult is it for transport operators to obtain vehicle finance in the current economic climate?
It is not really about whether it is easy or difficult to obtain credit. Even though the economic climate is not the best, it remains possible to finance vehicles optimally. At Scania Finance, each application is assessed on its merits and risk profile.
Tell us about Scania Finance. What sort of services do you offer?
We have a number of flexible options available to customers, in which tailored solutions can be applied to cover a variety of choices – financial leases, operational leases, instalment sale agreements as well as insurance cover. We pride ourselves on being a trusted partner rather than merely a finance provider, customising solutions to ensure predictable costs and manageable risks. Our aim is to deliver an advantageous financial plan that meets a customer’s operational needs and goals.
Do you believe the challenges involved in securing vehicle finance could be impacting on vehicle sales and the transport business in general?
No, as I’ve already mentioned, if a business case has merit there is no reason for anyone to struggle to get vehicle finance and insurance.
How would an owner-operator go about securing Scania Finance?
The process starts with the potential customer making contact with one of our experienced finance representatives, each of whom is a specialist in the transport industry. The initial discussion will include a comprehensive assessment of the customer’s financial position, and the representative will help to identify shortcomings and assist with financial calculations. A credit application form that covers all aspects of the agreement will need to be filled in, with approval for finance dependent on the merits of the case made.
Is it true that hire purchase or finance lease options remain popular with transport operators due to lower monthly repayments?
Instalment sale agreements and finance leases don’t necessarily come with lower monthly premiums – but they have advantages when it comes to tax deductions. In deciding on the type of vehicle finance best suited to a customer’s needs, some very important questions need to be asked, including:
• For how long would you like to keep the vehicle?
• Would you like to take ownership of the vehicle at the end of the term?
• Will you be replacing the vehicle immediately after settlement?
• Would you like to build equity in your fleet which you would be able to realise in case of tough times?
With some lenders charging extremely high interest rates to higher-risk businesses, it is alleged that the cost of finance, coupled with the length of the repayment term, could be hindering vehicle sales? How would you respond to this?
It is a reality that any higher-risk transaction attracts higher pricing. However, there are ways to mitigate risk even further by providing additional, tangible security. This could help to get the best deal at the right price.
What are the major advantages of using Scania Finance over packages provided by traditional finance institutions?
We understand our products. We understand transport. Just a phone call away, we offer the services of dedicated, knowledgeable finance representatives. We provide flexible solutions tailor-made to meet the needs of each of our customers, along with very competitive insurance products. As I’ve already said, our aim is to be a trusted partner rather than just a financial provider – that helps to set us apart from traditional financing institutions.
What are the major benefits for original equipment manufacturers (OEMs) that offer in-house financing?
It is not only about how we benefit, rather it’s about how customers benefit. At Scania Finance, understanding a customer’s business inside out makes it easier to provide solutions that are best suited to a variety of needs, so having the services of a one-stop OEM partner on call becomes extremely important, saving time and money.
Scania has been providing financial solutions for 20 years and I am proud to say that we currently finance around 64 percent of all products sold by our OEM – including new and used Scania buses and trucks.