With the coach and bus industry bouncing back well from the difficult pandemic years, many more operators are looking to expand their fleets. However, the gradual introduction of zero-emission vehicles and a strong market for used vehicles is putting them out of the reach of smaller businesses. Fortunately, operators have several alternatives to buying outright — both in the shape of different suppliers and through modes of financing.
Close Brothers’ wide range of products
Close Brothers Asset Finance is among those options. It offers a range of products, with one of the key ones being refinancing or capital release. This model works by the finance company purchasing the asset and financing it back to you, with repayments calculated in line with the income the asset is expected to generate. At the end of the term, you own the asset.
Hire purchase (HP) is another product offered by Close Brothers Asset Finance. This is where the borrower agrees to pay for an asset in instalments over an agreed period, during which they are responsible for the maintenance and repair of the asset. When the agreement ends, the borrower has the option of purchasing the asset outright.
Another, sale and HP back, is a form of refinance where the lender purchases an asset and finances it back to the borrower. Repayments are calculated in line with the income stream that will be generated by the asset. This is another that leads to the borrower owning the vehicle at the end of the term.
Finance lease lets the borrower use equipment without having to buy it outright. Rent is paid to the lender for its full use, and the rental period is flexible and can be tailored, depending on requirements. During the rental period, the borrower pays the full cost of the asset, including interest.
Meanwhile, operating lease is a type of finance where the borrower rents the asset for a short period. At the end of the lease term, the borrower can choose to either return the asset or continue leasing it.
John Fawcett, Chief Executive Officer of Close Brothers Asset Finance’s transport division, says: “Each product is tailored to a customer’s individual needs — it’s not one size fits all. Our evolution is about ensuring we’re flexible to customers’ changing needs, offering agreements that fit their cash flow requirements at a given point in time, rather than merely providing a standard vanilla offering.”
Asset Alliance Group introduces rentals
Asset Alliance Group, which has 20 years’ experience supporting operators with their longer-term asset investments, has recently launched a new coach and bus rental service to support the specific needs of UK operators, investing in a fleet of top-of-the range vehicles to kickstart the offering.
Instead of committing to long-term ownership or leases, the rental agreements on fixed monthly payments will allow customers to access buses for a defined period, with various contract options to choose from. Under the bus rental offering, new vehicle contracts start from one year and above, with shorter-term hires also possible subject to availability.
Customers can access a diverse selection of ready-for-use vehicles without the financial and operational responsibilities of ownership. Once the vehicle is returned and inspections have been conducted, unpaid balances are settled and the renter’s agreement obligations end.
The benefits include: rental agreement with fixed monthly payments; coach and bus rental allows operators to meet contractual needs without longer-term commitments; a quick response to client needs for additional contracts; flexibility in vehicle specification requirements; and access to the latest vehicles, with battery electric in the pipeline.
Martyn Bellis, Commercial Director of coach and bus at Asset Alliance Group, says: “We have a broad range of products available, everything from smaller minibuses up to single-deck and double-deck buses. We have new buses in stock and on order from a wide range of UK manufacturers to meet the differing needs of customers across the UK.
“As an independent bus and coach finance specialist, Asset Alliance Group is committed to supporting all contract sizes – especially customers for whom running a fleet is not part of their core business.
“We are here for everyone. The finance options cover everything from single assets through to large, multiple-vehicle contracts. Our rental service will free customers from extended commitments, providing them with complete flexibility to meet their business requirements.”
Propel Finance: backing people
The buoyancy in the coach and bus market means operators are looking to invest right now, notes Propel Finance, which supports a large number of operators with funding requirements, including through hire purchase, finance lease and refinance. The Newport-based business has been ranked the fastest-growing lender on the Asset Finance UK 50 list for the last two years, with a 400% growth since 2020. Although it operates over multiple sectors, its expansion has been particularly strong in our industry, led by coach and bus finance specialist Chris Rich.
For Propel Finance, the advantage of being an independent lender is being able to be more flexible in the approach of the underwriting. It has also been pleased to support newer businesses which typically find obtaining finance more challenging.
Among these is Jason Edwards Travel which, having, been established last year, operated its first coach holiday this month, having received help financing a used Irizar i6 tri-axle coach from Propel Finance. Its highly experienced Managing Director, Jason Edwards, says: “The difficulty I had was that, while I had a strong reputation and trading figures in a previous life, I’ve come into this as a new company, minimum trading history, there are not three years of accounts. A great reputation will only take you so far.
“We try and convey our business plan, our energy, our experience [and] that gets absorbed into Propel Finance and they come out with a green light and want to back you; that was really something of great support to us. To have that comfort blanket, knowing the whole team will come in and support us, that fuels our ambition for growth.”
As Marketing Director Julie Warren says: “We’re not a computer says ‘yes’, computer says ‘no’. It’s looking at the people behind the business, what they’ve done, where they’re going. I think that’s the advantage of being an independent in this marketplace.”
The market is set to grow, says Mistral Asset Finance
As operators seek to modernise their fleets, navigate regulatory changes, and adapt to evolving consumer demands, the role of asset finance has become increasingly significant, according to Mistral Asset Finance and its Commercial Director, Andrew Darby.
“We’ve witnessed steady growth in the asset finance market in recent years,” he says. “Operators are under some degree of pressure to upgrade their fleets to not only comply with emission standards, but also to enhance the passenger experience, and improve their own operational efficiency.
“Asset finance plays a hugely pivotal role in enabling these operators to acquire vehicles and equipment without substantial upfront investment. Here at Mistral Asset Finance, we look at tailored and innovative funding solutions that provide flexibility and preserve capital, allowing operators to allocate resources more effectively.”
Mistral Asset Finance says it focuses on providing tailored financing solutions to operators across the UK with a customer-centric approach.
“One of our key strengths lies in our deep understanding of the bus and coach sector,” says Andrew. “We stay attuned to market trends, regulatory changes, and technological advancements, which positions Mistral perfectly in being able to offer customised finance packages that align with the unique needs of our operators.
“Whether we are helping finance new buses and coaches, refinancing existing assets, or structuring rental agreements, our expertise adds value at every stage of the asset lifecycle.”
According to Mistral, the coach and bus asset finance market is poised for further expansion, driven by factors such as the electrification of fleets, digitalisation, and changing mobility patterns.
Andrew adds: “As operators navigate through this dynamic landscape, our position as a reliable finance provider will continue to play a crucial role in fostering this growth. We are committed to offering trusted guidance and actively listening to our customers, ensuring that we deliver tailored solutions that adapt to their evolving requirements.”
