Asset finance allows companies to collect funds for the purchase of assets they might need to make their businesses run successfully. At times, paying a lot of cash previously for buying assets can be very hard to manage. Moreover it might significantly modify the company's working capital. With asset finance one can raise the capital to purchase assets and also the money could be returned to the finance company through regular payments over an agreed period of time.
Asset finance can be used as purchasing used and new cars, coaches, light and heavy commercial vehicles, plant machinery and equipment for your office. With the help of asset finance solutions, you can purchase equipment for the 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 Kinds of Asset Finance Available in the UK
This typical credit facility is readily 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.
After the hirer pays a first deposit of 10-20% towards the finance company, he is able to take the asset from the supplier. Following a balloon payment is made at the end of the word, the title of the goods is transferred to the hirer.
Lease Purchase is usually confused as a regular lease. It's just like a hire purchase agreement with the only difference being that in a Lease Purchase the hirer needs to pay a first deposit of 10-15% like a multiple of the repayments. The payment for the remaining balance and interest is done in instalments.
Moreover, a Lease Purchase agreement is based on either a fixed or variable rate. The monthly instalment can be reduced by the inclusion of the balloon.
In Contract Hire, accommodations agreement is created between the supplier and the customer. Here the client hires the asset for any fixed time period and after the completion of the period, he returns the asset to the supplying dealer. With contract hire, the client gets the chance to use the new asset with no risks related to ownership.
With finance lease, one can get up to 100% finance for that acquisition of plant equipment needed in a business. Here, the ownership of the goods remains with the finance company which rents the products to the hirer on the predetermined period. Initially, the hirer must 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 time period.
Here an agreement is made to rent the asset for business purposes for any predetermined period. In the expiry of the agreed lease, the asset is either returned towards the financier or an offer to purchase it for any mutually agreed prices are made. One major line of difference between a practical 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 also the hire charges.
Taking a look at these various types of 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's essential to understand asset finance and it is 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 business and personal requirements. You should take specialist to avoid any kind of complications later on. One can take help from any reputed asset finance based consulting company to get a better deal for one's business.