Asset Finance

In the dynamic business background, we operate in today, the greatest challenges that big and small businesses face are finding ways to continue augmenting scalability, competitiveness, speed, and adaptability. Experts keep cautioning businesses to be more careful about costs, but it’s not as easy when you’re trying to boost productivity, which generally necessitates investments in things such as vehicles, equipment, software, industrial machinery, hardware and so forth.

This is where most companies appreciate the value of asset finance solutions. With obtaining asset finance, it enables you to acquire the desired equipment while conserving working capital while enjoying the perks of reduced tax payments throughout the process. You can decide whether to take out a loan to buy the equipment you require, or you can opt for a lease. These five deliberations can help you with determining which route is going to be best suited to your capabilities and needs.  

1. Budget

Taking out a loan to purchase equipment may necessitate a more substantial amount of money at the onset, but you won’t need to worry about making on-going payment once the final amount is settled. With a lease, you’ll be paying smaller instalments every month, but you’ll need to keep paying the bill for the period of which the equipment is under your care.

2. Upfront Costs

With a loan, you’ll generally be required to make a down payment. With leasing, however, you may be capable of obtaining Asset Finance UK not only for the machinery but for the fringe expenses too, i.e., installation, delivery, and training.

3. Period

If you’ll be requiring the equipment for less than three years, then leasing is your best option. But for longer periods it’s more economical to make an outright purchase.

4. Prospect Of Upgrading

With leasing, you have to let go of the equipment once it becomes obsolete, or you can opt for an upgrade or replacement to keep up with your changing needs and industry trends.

5. Long-Term Possibilities

If you've decided on taking out a loan, make sure you’ll be able to maximize utilization of the equipment by using it for alternative projects if it’s not being used for its original purpose. If you only require it for a short period in time, then leasing makes more sense.

Advantages Of Asset Finance

  • It is a manageable method of handling cash flow for new or growing businesses.
  • With asset finance, you can afford top-notch equipment without having to pay a significant upfront settlement.
  • Paying in installments make cash flow estimating less complicated and gives you a greater scope for budgeting.
  • When leasing an asset, the leasing agent can be utilized to do maintenance and repairs on the asset.

Disadvantages Of Asset Finance

  • Sometimes the hire purchase duration can be lengthy, sometimes several years by which time better assets may be on offer.
  • Not paying monthly installments may result in repossession of assets.
  • Non-payments or late payments can negatively affect your company’s credit score.
  • In the event of the asset being stolen during the process, the leasing company may not cover the whole cost, with you having to pay the shortfall.