Asset finance allows companies to collect funds for the purchase of assets they may need to make their businesses run successfully. At times, paying a lot of cash previously for buying assets can be really hard to manage. Moreover it would significantly affect the company's capital. With asset finance it's possible to raise the capital to buy assets and the money could be returned to the finance company through regular payments over an agreed time period.
Asset finance can be used for purchasing new and used cars, coaches, light and high commercial vehicles, plant machinery and equipment for your office. With the help of asset finance solutions, you can purchase equipment for your business without spending a large sum in one go.
In other words, it helps you save from the trouble of arranging a large amount of capital for buying much needed assets.
Major Types of Asset Finance Available in the UK
This typical credit facility is instantly available in which the financier permits the hirer the right to possess and use an asset in return for regular payments. Here, the hirer first finds the asset he wants and negotiates the value with the supplier.
Following the hirer pays a deposit of 10-20% towards the finance company, he is able to take the asset directly from the supplier. After a balloon payment is created at the end of the word, the title from the goods is transferred to the hirer.
Lease Purchase is usually confused like a regular lease. It is similar to a hire purchase agreement with the only difference because in a Lease Purchase the hirer needs to pay a first deposit of 10-15% as a multiple from the repayments. The payment for the remaining balance and interest rates are done in instalments.
Moreover, a Lease Purchase agreement is dependant on either a fixed or variable rate. The monthly instalment could be reduced by the inclusion of a balloon.
In Contract Hire, accommodations agreement is made between the supplier and the customer. Here the client hires the asset for any fixed period of time and after the completion of the period, he returns the asset to the supplying dealer. With contract hire, the client gets the opportunity to use the new asset without the risks related to ownership.
With finance lease, you can get up to 100% finance for the acquisition of plant equipment required in a business. Here, the ownership of the goods remains using the finance company which rents the products to the hirer on the predetermined period. Initially, the hirer needs to pay the documentation fee as well as an initial payment of the multiple of rentals. The remaining cost of the asset is paid back over the agreed period of time.
Here an agreement is made to rent the asset for business purposes for a predetermined period. At the expiry from the agreed lease, the asset is either returned towards the financier or perhaps an offer to buy it for a mutually agreed price is made. One major line of difference between an operating lease along with a finance lease would be that the primary rental period to have an operating lease does not cover all of the capital costs and the hire charges.
Looking at these various asset finance, it would not be tough to choose one for buying expensive equipment without forking out a huge sum of money at one go. But it is essential to understand asset finance and its various types properly before applying for it.
There are many finance companies that will help one to get competitive and tailored asset financial methods to suit one's personal and business requirements. You should take professional help to avoid any sort of complications later on. One can take the aid of any reputed asset finance based consulting company to get a better deal for one's business.