Asset finance can help your business secure the latest vehicles, machinery or technology that you might otherwise have been unable to afford. You can pay back the costs over time, leaving you free to use vital cash elsewhere. It can also help you avoid the risk of investing in assets that may depreciate or become obsolete before you’ve paid them off.
The best asset finance company assets finance company for your needs depends on the type of equipment you need and the length of the agreement. If you need a new vehicle, for example, you might choose hire purchase, which allows you to spread the cost of the asset over a term you set and gives you ownership at the end. Or you could opt for sale and leaseback, where you sell the asset to a finance provider who then leases it back to you. A finance lease is similar, but you don’t own the asset until you’ve made all the payments.
Other types of asset financing include operating lease, where you’re allowed to use the asset for a fixed period, and then hand it back at the end of the contract. With leasing, you can avoid the up-front capital costs of purchasing a new asset, and the provider takes care of maintenance and repairs. It’s important to remember that the equipment won’t be yours at the end of the agreement, so you should consider taking out insurance to protect the item from damage or theft.
It’s possible for individuals to get asset finance through a specialist lender, but it’s most common for businesses. A range of different lenders offer asset-based loans, so it’s worth shopping around to find the most competitive deal. Some of the main providers are regulated by the Financial Conduct Authority, and there’s also an industry body called the Finance and Leasing Association which has statements of recommended practice for leasing and asset finance.
In emerging markets, a new wave of private sector providers is showing that asset finance can be accessible for people on low incomes. This can help them afford the tools they need to earn an income or improve their lives, whether it’s a mobile phone to sell goods online or a solar home system that lights their homes and keeps smoke from other energy sources out of their lungs.
The process of setting up an asset finance company is long and complicated, but the benefits can be significant. It’s essential to weigh up the risks and decide which options are right for your business. Having the right asset finance in place can allow your company to grow, increase profitability and meet its financial goals. It can also unlock crucial working capital, which can then be invested in other projects. There’s a wide choice of solutions on the market, so it’s worth getting expert advice before you sign any contracts.