Leasing and Asset Finance

Leasing and Asset Finance


What is leasing and asset finance?

Leasing and asset finance are specifically for either purchasing or renting an asset for your business. This could be machinery, office equipment, commercial vehicles or cars.

Why would I want it?

This allows you to purchase an expensive piece of equipment or vehicle that might not be possible from current funds. It allows you to spread the cost over a designated time period which is agreed with the leasing or asset finance company.

How does it work?

You would find the item that you require and then arrange the leasing or finance through a financing house. Once everything is agreed the finance house would then pay the manufacturer. Manufacturers of machinery and equipment will often have ties with leasing companies and may be able to offer advantageous rates, however it is always worth checking yourself in the marketplace. The same would go for commercial vehicles and cars.

What are the benefits?

Interest rates are normally fixed so you know what you are paying each month. The leasing company will carry the risk if the equipment fails. Unlike a secured loan the security is in the asset and not in your home, for example, so if you default on the payments the equipment will be taken back. There is a wide choice of financiers and can be easy to arrange.

What are the pitfalls?

It can be more expensive than buying the equipment outright and some contracts may be difficult to cancel early. You can only claim capital allowances on a leased asset with more than a 5 year term. With these finance options there are up-front payments to be made and can be made up of 3, 6 or 9 months payments in advance.

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