Asset financing is a way for a business to raise funds to buy or replace existing equipment without overstretching its finances.
Asset finance is essentially a loan you use specifically to buy, or lease assets needed to move your business forwards. Depending on the nature of your business, the assets concerned could be anything from basic office equipment to vehicles and machinery.
Hire purchase: Many asset finance arrangements are hire purchase contracts which give you immediate access to assets that you will own outright after completing a series of payments.
Hire purchase agreements generally last between one and six years. This method involves you paying a deposit as well as fixed monthly instalments for the agreed term.
Equipment leasing: This makes for a straightforward leasing agreement in which you rent the assets you need, but do not own them at the end of the term.
Leasing asset finance agreements involve the lender buying assets, such as agricultural or haulage equipment, and leasing them to you for a fixed monthly sum. You can therefore access the assets you need without visibly borrowing money or using up your capital.
Asset refinancing: These agreements are aimed at businesses that have already invested in equipment and which now need to release some of the capital tied up in those assets. The lender buys the equipment from you and leases it back to you over a set period, during which you make regular payments.
Navigating your way through the different forms of lending banks and companies have to offer can be overbearing. Head to our comparison tool and we’ll be able to help you find the perfect option to finance your business the right way.