The Benefits of Asset FinanceSam Sandhu
The easiest way to think about asset finance is to think about hiring a car that you also want to keep. You pay in instalments over a period of time and once you’ve paid in then you own the car, the car in this example is also used as security while you make the payments.
Now if you think that sounds like a hire purchases that’s because it is, hire purchasing is one of the most common variants of asset finance. But it can take other similar forms like an operating lease or even a short-term commercial loan.
While asset finance is frequently used for purchasing vehicles it can be used for buying assets of all kinds like computer systems, machinery or property. Asset finance has been growing steadily for some time with data from the Finance and Leasing Association showing that it grew by 5% in 2016 alone. 2016 also marked six years of consecutive growth for asset finance in the UK.
But why is asset finance so popular with businesses? Well, let’s take a closer look at the benefits of asset finance and find out.
Secure Fixed Costs
While this can vary in the majority of cases, asset finance offers secure fixed costs. This makes it much easier for businesses to budget and predict future cashflow.
Spreading The Cost
Asset finance also allows businesses to spread the costs of their assets whether it be vehicles, new computer systems or machinery – ultimately improving the cashflow in the business.
Faults Are Covered
One of the lesser known benefits of asset finance is that often you’re covered if equipment breaks down.
It’s The Safer Option
While there is still an element of risk involved with asset finance, in general, it is much less risky than a standard loan. If you fail to make necessary payments, you only lose the asset. With other finance options that have security over multiple assets, you could stand to lose a lot more.
Here at Funding Bay we work with a wide range of lenders in the Asset Finance industry and will be able to support you on what is right for your business.