Asset finance allows companies to collect funds for that purchase of assets they may need to make their businesses run successfully. Sometimes, paying a huge amount of cash at one time for buying assets can be very hard to manage. Moreover it would significantly modify the company's working capital. With asset finance one can raise the capital to buy assets and the money can 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 office equipment. With the help of asset finance solutions, you can purchase equipment for the business without spending a large sum all at once.
In other words, it helps you save from the trouble of getting a large amount of capital for purchasing much needed assets.
Major Types of Asset Finance Available in the UK
This typical credit facility is instantly available where the financier allows 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 deposit of 10-20% towards the finance company, he can take the asset directly from the supplier. Following a balloon payment is created at the end of the word, the title from the goods is transferred to the hirer.
Lease Purchase is often confused as a regular lease. It is similar to a hire purchase agreement using 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 that remaining balance and interest rates are done in instalments.
Moreover, a Lease Purchase agreement is based on either a fixed or variable rate. The monthly instalment can be reduced through the inclusion of the balloon.
In Contract Hire, accommodations agreement is created between the supplier and the customer. Here the customer hires the asset for any fixed period of time and after the conclusion of the period, he returns the focal point in 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, one can get up to 100% finance for the acquisition of plant equipment required in a business. Here, the ownership from the goods remains using the finance company which rents the products to the hirer over a predetermined period. Initially, the hirer needs to pay the documentation fee and an initial payment of a multiple of rentals. The rest of the cost of the asset is paid back over the agreed time period.
Here a contract is made to rent the asset for business purposes for a predetermined period. In the expiry from the agreed lease, the asset is either returned to the financier or perhaps an offer to buy it for any mutually agreed prices are made. One major type of difference between an operating lease and 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.
Taking a look at these various asset finance, it wouldn't be difficult 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 it is various types properly before you apply for it.
There are many finance companies that can help one to get competitive and tailored asset financial solutions to suit one's personal and business requirements. You should take specialist to avoid any sort of complications later on. One can take help from any reputed asset finance based consulting company to get a better deal for your business.