Asset Finance

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    Asset Finance

    Asset finance is used by hundreds of thousands of companies throughout the UK as it allows their business to grow at the pace they would like.

    It is likely that you will need to make a significant investment in a new asset at some point in the growth of your business. Asset finance makes that day come sooner and makes that day easier to survive!

    This could include the purchase of any number of assets but could include a new computer system and software, new machinery and equipment, or a new motor vehicle such as a van.

    Whether you are a private individual or a business you are probably looking at the price of your new asset and wondering how you are going to afford the one off, large payment required to make your purchase. It could be that your own cash reserves have diminished, your overdraft limit only allows for normal peaks and troughs of cashflow and/or your bank are being their usual unhelpful selves! This is where asset finance from an independent source can help.

    Asset finance can offer a flexible alternative to a normal loan, providing cash flow and tax benefits. It is secured on the asset being provided and differs from a loan in that the finance cannot be recalled during the lifetime of the agreement. The item or equipment can usually be updated or replaced at the end of the lifetime of the agreement, or during the period of the agreement by settling off the loan early.

    The two main forms of asset finance are hire purchase and leasing

    Both products spread the cost of your equipment. Simplicity is why most people choose one or the other.

    With Hire Purchase you choose the amount of deposit you wish to pay. The remainder of the balance, together with the interest, is repaid over an agreed period, and on payment of a small option to purchase fee you take ownership of the asset.

    • Low deposit - doesn't tie up personal or business assets
    • Control - you decide the deposit, you decide the term
    • Fixed monthly payment - makes budgeting simple
    • Ownership - you gain ownership of the car at the end of the agreement
    • Tax benefits - tax allowances for business users
    • VAT free - no VAT on payments

    For many, paying the Vat up front on a finance deal is often difficult, and for some, the manner in which they claim their writing down allowances makes ownership less attractive.

    Leasing may be a better fit in these cases. Not only are the following attractive but the tax allowance the finance company retains on their ownership is reflected back to the hirer AND you don't need to find 20% of the purchase price as VAT.

    • Low deposit - doesn't tie up personal or business assets
    • Control - you decide the deposit, you decide the term
    • Fixed monthly payment - makes budgeting simple
    • Tax benefits - tax allowances for business users