Chauffeur finance

Although chauffeur finance can include loans to cover working capital, it is typically provided as commercial fleet financing which is used to purchase or lease vehicles for chauffeur services. These types of loan allow transport operators to maintain a premium fleet by spreading the cost of expensive vehicles over time.

Key components of commercial fleet financing:

• Usually used to pay for more than one new vehicle at a time, although solo purchases are accepted
• All commercial fleet financing is a lease (long-term rental), but it may give the lessee (you) the option to buy the vehicle at the end of the contract
• You will usually need to pay a deposit at signing – often this is equal to one month’s instalment of the lease – although for lessees with poor credit, it could be as high as 20% of the vehicle price
• Contract periods are typically 2 – 5 years
• Interest and fees are charged on the financed sum and included in your monthly payment
• The monthly lease payment is decided by three main factors: 1) The price of the vehicle. 2) The strength of the lessee’s credit – better credit means lower interest and fees. 3) The residual value of the vehicle at contract end. This is an estimate of the value of the vehicle after you have finished using it. Typically, the lower the residual value, the higher your monthly payment

Other types of chauffeur financing:

Chauffeur finance can also include working capital loans that are used to cover daily operations, such as:

• Payroll
• Vehicle maintenance
• Vehicle insurance
• Garage overhead
• Fuel, energy and utility costs
• Advertising and marketing

Popular business loans for chauffeur operators:

• Term loan: This is the simplest form of business loan. You receive a single, lump-sum cash injection and then pay it back in regular instalments over a fixed period of up to 25 years. Collateral may be required
• Business line of credit: Withdraw as much as you want when you want from a loan facility up to the limit of your borrowing. You only pay interest on the sums you withdraw, not the whole credit line. This can make the borrowing significantly cheaper. Collateral may be required.
• Invoice financing: Borrow against the value of your unpaid invoices. The lender usually provides up to 95% of the invoice value within a few days or even hours of the bill being raised.  Your invoices act as security for the loan, no added collateral required.
• Equipment financing: Used to buy or lease new machinery, such as vehicle ramps and diagnostic equipment. Use your new machinery as you pay for it, while the lender maintains a lien on the equipment. Once you pay the loan back, the lender releases the lien, and you own the assets outright. No added collateral required.

Requirements for chauffeur finance

In most cases, you’ll need the following to obtain chauffeur finance:

• Personal FICO credit score of +600
• In business at least 6 months
• +6 months revenues
• Cashflow forecast
• Business registration documents and any required licenses or permits
• Business bank statements – most recent 6 months 

You should also be prepared to provide collateral with a value that is at least equal to the amount you wish to borrow. Collateral can be real estate, land, or other major assets. Lenders typically ask for this type of security when businesses have weak trading results or when the business owner or principal has poor personal credit. 

If you don’t have sufficient collateral to support the loan, you could consider bringing a co-signer into the deal. This would be someone you know who has good credit and/or assets and who is prepared to backstop the loan in case of your default.