Buying a new asset outright can tie up large amounts of capital, so it may not be the most efficient approach. Asset finance offers an alternative way of funding your purchase.
Asset finance can be used for more than just a company car. It applies to any asset used for business purposes, from printing presses and IT equipment to construction tools and forklift trucks.
A brief overview of the options available
1. Hire Purchase: pay the full cost of the asset over a defined period, after which you will own the asset. If you’re application for Hire Purchase is declined, you may appeal.
2. Finance Lease: similar to HP, but you will not own the asset at the end of the contract. If you’re still using it, you can enter a second agreement.
3. Operating Lease: rent the asset for an agreed period of time. The residual value, what the asset is worth at the end of the lease agreement, is taken off the value on which the lease amount is based, reducing monthly payments.
4. Contract Hire: like an operating lease, but often incorporates maintenance to ensure the asset is worth the estimated residual value at the end of the contract.
The benefits of Asset Finance
No large capital outlay
Easier access to modern technology and the resultant financial benefits that Asset Finance can bring.
It can often be a tax efficient depending on the tax allowances available. Speak with your accountant or tax advisor to decide which is the best option to suit your company’s tax situation.
Where can I find out more?
Your local corporate bank will be pleased to go through the options in more detail, or you can contact the Finance & Leasing Association: