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What Is Asset Finance? What Are The Benefits Of Asset Finance?

Do you feel that your company is experiencing difficulties? Are you seeking an alternative to taking on additional capital obligations? If yes, asset finance can help you improve your cash flow and spread out your costs. Finance Hub can assist you with any financial challenges within your business. Our company is the best asset finance provider in the UK and can provide you with asset financing solutions that can allow you to expand without being restricted by resources.

What is Asset Finance?

As the name suggests, this is a type of borrowing that involves a company’s assets. Assets include buildings, offices, IT software, vehicles, and equipment that contribute to the economic well-being of a person or business. Asset finance UK is, in other words, a loan granted to a company based on its financial strength. Companies that have a chance to expand but lack the funds to do so typically use asset financing to finance their expansion. Purchasing costs can also be spread over a longer period of time, which can be useful for businesses.

What Are Different Types of Asset Finance?

An asset financing plan can help a company spread the cost of buying or acquiring equipment over time. Different types of financing options are available to buy assets. Despite their differences, they all follow the same principles of asset finance. There are so many options available to a business owner, how does one know what to choose? The best asset finance provider in UK – Finance Hub – can assist you in this matter.

Here are the main types of Asset Finance UK.

Hire purchase

This type of asset financing involves a business leasing an asset from a lender, who purchases and leases the asset. It is the leasing company’s responsibility to maintain, repair, and ensure the assets throughout the lease term. During the lease period, the business pays a continuing lease payment to the asset provider. Following the termination of the lease, ownership of the asset is transferred to the business. The flexibility of hire purchase provides a benefit and helps reduce cash flow problems.

Capital lease or finance lease

As opposed to other types of asset financing, this one only involves renting the assets. Payments are made through regular installments according to an agreed schedule. Finance providers typically retain ownership of the asset until they have recouped their initial investment. Best asset finance providers in UK will sometimes allow a business to receive a percentage of sale value once the item has been sold. However, the business does not own the asset outright. If a business makes a profit, it may be possible to deduct the rental payments from that profit. Long-term financing leases, though, don’t allow this deduction.

Chattel Mortgages

One of the reasons why chattel mortgages are so popular is that you own the asset right from the beginning. As opposed to a mortgage on real estate, a chattel mortgage is a mortgage on the movable property such as vehicles or factory machinery. The asset you use as collateral for your loan secures the loan, and you are able to customize your loan arrangements by extending the loan term. A loan term of up to five years would be typical. Adding a higher down payment or paying a higher final installment to your chattel mortgage can also allow you to customize it.

Operating leasing

It is very similar to equipment leasing but is usually used for specialist machinery and equipment that a business may not want to possess for the full duration of the asset’s useful life or does not wish to obtain permanently. Essentially, operating leasing involves renting an asset for a short or medium-term period, with the amount of rent based on the length of time that asset is required. Equipment leasing is often more expensive than calculating the value of an item and paying the calculated value over a limited period of time.

Novated Leases

A novated lease is the best option for anyone wanting to finance a vehicle as part of their salary package. When you choose this asset finance UK option, the employee and employer sign a novation agreement, meaning they are both responsible for the loan. Novated leases can save you substantial amounts in income tax and GST while bundling all the costs of running a vehicle into one easy, fixed, and regular payment. If employees want to use a novated lease, they should contact their Human Resources departments. Best asset finance provider in the UK offers the lending terms for such financing options generally ranging from four to five years.

What Are the Reasons & Benefits of Asset Finance?

Small and large businesses can use asset financing as a flexible funding method. Registred companies, contractors, and sole traders are eligible to access the funding facility. There are a number of benefits associated with asset finance Uk. Our objective here is to highlight the unique and outstanding characteristics of this type of finance that will help you give your business a tremendous boost.

Securing the use of assets

It’s understandable that purchasing assets outright can have a detrimental effect on a company’s working capital and cash flow. A company can acquire the assets it needs to grow and operate as well as maintain financial flexibility in the allocation of funds to fill other needs. Furthermore, it allows businesses to acquire the assets they need without incurring excessive costs. Asset financing is both safer for lenders (as opposed to a traditional loan) and more beneficial for borrowers.

Accessing capital

The asset finance method can also help businesses with capital locked up in assets to secure a line of credit. A line of credit can be obtained by using high-value assets as collateral. Business owners who struggle to qualify for loans from traditional lenders or who need to secure financing quickly to capitalize on business opportunities can benefit from this method of financing.

Increase customer base

Providing financing makes products and services more affordable to more consumers, which grows the potential customer base of businesses. Many people do not have the cash to purchase furniture or renovate their buildings in cash upfront. With asset finance UK, companies are able to break down costly purchases into affordable payments, which in turn increases the number of potential customers available to them.

How Finance Hub Help You Get Flexible Asset Finance Solutions in the UK?

The asset finance industry is a key component of the UK economy. Financial and Leasing Association reports that leasing and hire purchase activities of everything from construction machinery to agricultural vehicles as well as IT systems and aircraft reached record levels in 2019, growing by 6%.

The Finance Hub works with a wide range of asset finance providers in the UK. Many of these companies specialise in specific industry segments or types of loans. Business owners can access funding and equipment through our flexible asset finance UK solutions. You will not be charged an application fee or any early payment fee. We are also offering same-day approval regardless of your business condition.

Get in touch with one of our asset finance Uk experts to discuss your asset finance options, or just fill out our estimate form.

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