Asset Finance
Asset Finance is a versatile solution, enabling businesses to acquire or lease essential assets by spreading their cost over time. This type of financing is suitable for a wide range of assets, such as vehicles, machinery, technology equipment, and more.
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*This loan example is for illustrative purposes only. All finance and quotes are subject to status and income. Click here to check your eligibility to receive options tailored to your circumstances.
Asset Categories
Vehicles
Commercial vehicles, company cars.
Technology Equipment
IT hardware, software solutions.
Office Equipment
Furniture, fixtures.
Plant & Machinery
Finance heavy machinery, construction equipment.
Types of Asset Finance
There are several forms of asset finance, each catering to different business needs: Hire Purchase, Hire Purchase with Balloon Payment, Finance Lease, Operating Lease, and Contract Hire. These options offer flexibility, from owning the asset at the end of the term to simply renting it.
Eligibility and Application Process
Businesses considering asset finance should assess whether the asset is critical for operations and if it's more feasible to make smaller payments over time rather than a large upfront expenditure. The application process involves reviewing the asset's cost and the business's financial health.
Advantages and Disadvantages
Asset finance offers numerous advantages, such as minimal upfront costs, better cash flow management, and access to the latest equipment. However, businesses might not own the asset outright, and there may be usage limits or liabilities for damage.
Interest Rates and Repayment
Interest rates and repayment terms vary based on the type of finance chosen and the asset's value. Fixed interest rates and monthly repayments help in better cash flow management.
Utilisation and Flexibility
Asset finance is versatile, suitable for acquiring a range of equipment necessary for business growth and operational efficiency. It provides an opportunity to upgrade or obtain new equipment without tying up working capital.
Considerations for Applying
When applying for asset finance, businesses should consider their requirements for the asset, its impact on operations, and the terms offered by the finance provider. It's also important to factor in maintenance responsibilities and the total cost of financing.
Frequently asked questions
What is asset finance?
Asset finance is a funding solution that allows businesses to acquire equipment, vehicles, or machinery without paying the full amount upfront. It typically involves leasing or making regular payments for the asset over an agreed period.
Who can apply for asset finance?
UK-registered businesses of all sizes, including start-ups, can apply for asset finance, provided they have a clear need for the asset and the ability to make regular payments.
What assets can be financed?
A wide range of assets can be financed, including industrial machinery, vehicles, IT equipment, office furniture, and more.
What are the different types of asset finance?
The main types include Hire Purchase, Finance Lease, Operating Lease, and Contract Hire. Each type offers different ownership and payment structures.
How does Hire Purchase work?
Under Hire Purchase, you make regular payments for the asset and eventually own it outright at the end of the agreement, typically after making a final ‘balloon’ payment.
What is a Finance Lease?
With a Finance Lease, the lender buys the asset and rents it to you. You make regular payments and have the option to continue leasing, return the asset, or sell it on behalf of the finance provider at the end of the lease term.
What are typical terms and repayment periods?
Terms and repayment periods can vary depending on the asset’s type and value, usually ranging from one to five years.
Can I finance used or second-hand equipment?
Yes, many asset finance providers offer financing for used or second-hand equipment.
What documents are required for asset finance?
You’ll generally need to provide details about the asset, business financial statements, and information about your business’s trading history.
What happens at the end of the finance term?
The outcome depends on the type of finance agreement. With Hire Purchase, you usually own the asset outright. With leases, you may return the asset, extend the lease, or arrange to sell the asset.
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Limited companies can receive a loan decision without impacting their credit score. This allows you to evaluate your options without worry.
