As a business owner, securing the right type of finance for your assets can be crucial for growth and operational efficiency. Asset finance allows you to obtain the equipment, machinery, or vehicles you need without the hefty upfront costs. Instead, you spread the cost over time, preserving your cash flow for other essential business activities.
Here’s a breakdown of the main types of asset finance you can apply for through our panel of trusted providers:
1. Hire Purchase
What is Hire Purchase?
Hire purchase is a straightforward way to finance an asset. You agree to pay for the asset in instalments over a set period, typically at a fixed interest rate. At the end of the term, once all payments have been made, you own the asset outright.
Key Benefits:
- Ownership: You’ll own the asset at the end of the repayment term.
- Fixed Payments: Your repayments are spread over time, making budgeting easier.
- Asset Utilisation: You can use the asset while paying for it, helping to generate revenue.
Considerations:
- Deposit Required: A deposit is usually required upfront.
- Commitment: You are committed to the repayment schedule for the duration of the term.
2. Finance Lease
What is a Finance Lease?
A finance lease allows you to lease a piece of equipment and use it over a set period. The finance provider retains ownership of the asset, but you benefit from exclusive use during the lease term. Payments typically cover both the original cost of the asset and interest.
Key Benefits:
- No Large Upfront Cost: You don’t need to purchase the asset outright.
- Flexibility: At the end of the lease term, you can renew the lease, purchase the asset at a residual value, or return it to the provider.
- Operational Efficiency: Access to high-value assets without compromising cash flow.
Considerations:
- No Ownership: You won’t own the asset unless you choose to purchase it at the end of the term.
- Long-term Cost: Over time, the total cost may be higher than outright purchase due to interest and fees.
3. Asset Refinance
What is Asset Refinance?
Asset refinance enables you to raise capital by using your existing assets as security. You can borrow a lump sum against the value of your assets and then make monthly repayments over a fixed term. This option is ideal for businesses that own valuable assets outright and need to unlock liquidity.
Key Benefits:
- Unlock Capital: Access the value tied up in your assets without selling them.
- Maintain Operations: Continue using the assets while you repay the loan.
- Flexible Use of Funds: Use the capital for various business needs, such as expansion, paying off debts, or improving cash flow.
Considerations:
- Risk of Repossession: If you default on repayments, the lender can repossess the assets used as security.
- Owned Assets Only: The assets must be owned outright by the business.
Choosing the Right Option for Your Business
Selecting the appropriate type of asset finance depends on your business’s specific needs, financial situation, and long-term goals. Here are a few steps to help you decide:
- Assess Your Needs: Determine what assets you need and how quickly you need them.
- Evaluate Your Financial Health: Consider your cash flow, existing debts, and ability to make regular repayments.
- Consider Ownership: Decide if owning the asset at the end of the term is important to your business.
Reach out today to explore how asset finance can benefit your business!
Grow your business with us. Book a free consultation call with a friendly member of our team by clicking here. We’ll run through what you need and give you our expert advice. Then, if you want to proceed, we’ll find you the best offers from a number of lenders. Book your consultation today by clicking here.