Zenith Finance Blog

Asset finance – the benefits and 4 great asset finance options

Buying equipment, cars or heavy vehicles with cash to run and expand your business can be a big drain on your cash flow.

To reduce some of the risks associated with purchasing fixed assets, you could look at taking out asset finance loan, generally over 1 -5 years. Four of the most popular types include:

Commercial Hire Purchase (CHP)

Your financier purchases the equipment or vehicle on your behalf. They then hire it out to you over a contracted time frame. During this period, they still own the vehicle or equipment. When your contract term is finished and you’ve paid in full, you own the equipment or vehicle.

Learn more about commercial hire purchase asset finance

Chattel mortgages

Your financier gives you the money to buy the equipment or vehicle and you own it immediately. As security, they take out a mortgage over the equipment with the ASIC. When your contract term ends and you’ve paid the loan in full, the mortgage title is yours.

Learn more about chattel mortgage asset finance.

Finance leases

Like in a CHP, your financier buys the equipment or vehicle on your behalf and hire it out to you over a contracted time frame. At the end of the lease period they financier still owns it but you may be able to purchase it from them.

Learn more about finance lease asset finance

Operating lease

Your financier buys the equipment and rents it to you for an agreed payment over a fixed term. You get to use the equipment without the hassle of disposing of it at the end of its life. It’s like renting your equipment over a fixed period.

Learn more about operating lease asset finance

Here are some of the greatest benefits of asset finance:

Saves working capital

The smaller, frequent payments means available cash can be invested in other areas of the business. You can also adapt quickly to new business opportunities and unforeseen surprises.

Respond to unexpected surprises

To keep up with developments in technology and your industry, you want to financial solutions that allow timely response to changing needs.

Better budgeting

Regular fixed payments makes it easier to budget and you don’t need to worry so much about inflation or changes in interest rates.

Maintain existing credit

As it won’t be linked to existing lines of credit arranged with a bank or other financial institution you are free to use other bank facilities.

Flexibility

Asset finance is tailor made so that your future targets of the business can be achieved as planned. In some cases you also have the option to repay monthly or quarterly.

Don’t always need a deposit

With some types of asset finance loans you don’t need a deposit up front. Instead, you just make regular payments as per the terms of the agreement.

Tax benefits

Some asset finance payments are seen as expenses, so they can be offset against profits to reduce the overall cost.

In today’s market, asset finance can give your business the competitive edge you need. However, it’s important to know that different asset finance solutions suit different needs and situations.

If you’d like to find out which asset finance option is best for your business equipment and vehicle financing requirements, contact our asset finance experts today.

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