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Asset finance allows companies to gather funds for that purchase of assets they might need to make their businesses run successfully. At times, paying a lot of cash previously for buying assets can be very hard to manage. Moreover it would significantly modify the company's working capital. With asset finance one can raise the capital to purchase assets and also the money could be returned to the finance company through regular payments over an agreed period of time.
Asset finance can be used for purchasing used and new cars, coaches, light and high commercial vehicles, plant machinery and equipment for your office. With the help of asset finance solutions, you can buy equipment for the business without having to spend a large sum in one go.
In other words, it helps you save from the trouble of arranging a large amount of capital for buying much needed assets.
Major Types of Asset Finance Available in the UK
This typical credit facility is instantly available where the financier permits the hirer the right to possess and use an asset to acquire regular payments. Here, the hirer first finds the asset he wants and negotiates the purchase price with the supplier.
Following the hirer pays a first deposit of 10-20% to the finance company, he is able to take the asset from the supplier. After a balloon payment is created at the end of the word, the title of the goods is transferred to the hirer.
Lease Purchase is usually confused as a regular lease. It is similar to a hire purchase agreement with the only difference because in a Lease Buy the hirer needs to pay a deposit of 10-15% like a multiple of the repayments. The payment for that remaining balance and interest is done in instalments.
Moreover, a Lease Purchase agreement is based on either a fixed or variable rate. The monthly instalment can be reduced through the inclusion of the balloon.
In Contract Hire, a rental agreement is made between the supplier and the customer. Here the client hires the asset for a fixed time period and after the completion of the period, he returns the focal point in the supplying dealer. With contract hire, the customer gets the opportunity to use the new asset without the risks associated with ownership.
With finance lease, you can get up to 100% finance for the acquisition of plant equipment needed in a business. Here, the ownership from the goods remains using the finance company which rents the goods to the hirer over a predetermined period. Initially, the hirer must pay the documentation fee and an initial payment of the multiple of rentals. The remaining cost of the asset is paid back over the agreed time period.
Here a contract is made to rent the asset for business purposes for a predetermined period. In the expiry from the agreed lease, the asset is either returned to the financier or perhaps an offer to buy it for any mutually agreed price is made. One major type of difference between a practical lease along with a finance lease would be that the primary rental period for an operating lease doesn't cover all the capital costs and the hire charges.
Looking at these various asset finance, it would not be difficult to choose one for purchasing expensive equipment without forking out an enormous sum of money at one go. But it's essential to understand asset finance and its various types properly before applying for it.
There are lots of finance companies that can help one to get competitive and tailored asset financial solutions to suit one's personal and business requirements. You should take specialist to avoid any sort of complications later on. One can take the aid of any reputed asset finance based consulting company to obtain a better deal for your business.