The Ultimate Guide: What is Asset Finance?

If you’ve been looking into different types of financing options, then you’ve probably come across hundreds of different ways to raise capital. One very feasible solution for many businesses, whatever size, is asset finance.

A yellow hard hat placed on top of a white concrete brick in a construction site

What is Asset Finance?

Put very simply, asset finance is where you obtain a loan for the purchase of new company assets, such as tools, equipment, company vehicles and even office furniture. This will help you to develop and grow your business by giving you the finance you need to get the equipment to drive your company forward. Unlike with hiring or leasing the assets you need, at the end of the loan you will be the full owner – adding to your company’s equity with payments that you can afford.

What Makes Asset Finance the Best Option?

If you need to get your hands on some expensive equipment, you may struggle to afford it. Asset Finance comes in many different shapes and forms, some of the most common ones include:

•    Hire Purchase – arguably the most common type of asset finance, this allows you to hire an asset from a leasing company over a set amount of time which includes regular payments. Once the payments have all been made, your company will have complete ownership.
•    Finance/ Operating Leasing – This allows your company to use an asset for a fixed period of time in return for regular payments, however you will not have ownership of the asset at the end of the term.
•    Asset Refinance – if you need to free up cash then asset refinance allows you to sell your assets to a lender who then lease them back to you – this gives you a cash injection and let you retain the use of your assets.

Depending on the amount you want to repay and the final outcome of the asset finance you can choose the option best suited to you. Talking to a commercial finance broker can also help you to get the best rates available, often allowing you to opt for hire purchase at the price that leasing generally costs.

What Are the Main Benefits?

There are many perks to using asset finance, from the obvious one of being able to purchase new equipment while protecting your cash flows to the leasing benefit of avoiding depreciation or costly repair bills.
Another benefit is that if you only need the assets for a set amount of time you can lease it without the worry of having to sell it on at the end of its use. You also have the option of upgrading the asset without having to sell off the previous asset beforehand. Because this is a business loan it also comes with several tax benefits that you wouldn’t get with a normal loan.

Summary of Asset Finance

If you are looking to acquire assets without having to break the bank then asset finance could be perfect for you. This is a flexible finance that allows you to gain access to the equipment, tools and vehicles you need to push your business forward. If you’re thinking about taking out asset finance then talk to us today and find out how we can help you get the best possible rates.

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