Asset finance for the cash your company needs

Asset finance effectively lets companies to collect funds to purchase the assets they may need to run their businesses successfully. Laying out large sums of cash in one go for assets can be a struggle at times, and can have a detrimental effect on the working capital of a company. With asset finance a company can raise the capital needed to purchase assets and the money repaid to the lender through regular, monthly payments.

Asset finance can be used for anything related to your business, such as office equipment, plant machinery, light or heavy commercial vehicles, coaches, new or used cards, whatever the needs of your business. In the current economic clime, many businesses don’t have the spare cash to buy the assets they need, and this is where asset finance really comes into its own.

There are several different ways of attaining asset finance, and your accountancy services will be able to advise which is the best for you and your company. The most common credit facility is hire purchase, where the borrower acquires the money they need to purchase the asset from a finance company or other lender.

The borrower will pay the lender a deposit, takes the asset, then repays the lender in regular payments until the loan is repaid, and the borrower is then the owner of the asset. Lease purchase is often confused with regular leasing, but there are significant differences. Lease purchase is similar to hire purchase but there is a higher deposit involved, and the repayments can change depending on whether the agreement rate is fixed or variable.

If a company enters a contract hire agreement, rental agreement is forged between the customer and the supplier. The customer effectively hires the asset for a fixed loan period, and when this expires he returns the asset. This gives the customer the opportunity to have the use of a new asset, but without the possible risks that come with ownership.

Finance leasing allows the company to get up to 100% financing for asset acquisition. The ownership of the said asset remains with the finance company who then rent it to the company for a set period of time. The company initially pays a documentation fee and an initial payment that equates to several rental payments. The remaining cost is then paid back over a pre-arranged period of time, and only then does the company own the asset.

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