What you need to know
Asset finance enables companies to obtain funding for the purchase of assets, such as machinery or equipment required to run and grow their businesses successfully. Paying cash outright for capital assets can be a significant drain on your company’s working capital. With asset finance you will ease your cash flow through regular payments over an agreed period of time. Funding is available for cars, coaches, light and heavy commercial vehicles, plant, machinery, office equipment, IT, telecoms and more.
Hire Purchase
Hire Purchase offers a straightforward way to spread the cost of your new asset purchase. You pay a fixed rate of interest and benefit from fixed monthly payments, making budgeting simple and easy.
You choose the amount of deposit you wish to pay, typically between 10% – 50% of the asset’s price + full VAT if applicable. The remainder of the balance, together with the interest, is repaid over an agreed period (12 – 60 months).
- Low deposit - Doesn’t tie up cash reserves
- Control - You decide the deposit, you decide the term
- Fixed monthly payment - Makes budgeting simple
- Flexibility - Doesn’t compromise your other lines of credit
- Assets - You gain ownership of the asset
- Tax benefits - Tax allowances for business users
- Revenue - Assets are financed from revenue as you put them to work
Hire Purchase with Balloon
Hire Purchase with a balloon offers lower monthly payments than standard Hire Purchase. Instead, at the end of the agreement, you can make a final lump sum payment (or ‘balloon’) to purchase the vehicle in full. It is fixed rate finance – but with a lower fixed monthly outlay since you defer repayment of some of the borrowing. At the end of the agreement you have a number of options including vehicle purchase, refinance, part-exchange or resale. The deposit you pay is flexible – typically between 10% – 50% + full VAT if applicable of the vehicle’s full price.
- Low deposit - Doesn’t tie up cash reserves
- Lower fixed monthly payments - Perfect for budgeting
- A better asset - Lower payments can help you choose a newer or higher specification vehicle
- Flexibility - Doesn’t compromise your other lines of credit
- Assets - You gain asset ownership
- Tax benefits - Tax allowances for business users
- Revenue - Assets are financed from revenue as you put them to work
Finance Leasing
The Financial Institution buys the asset and leases it to the customer by way of rentals that repay the cost; at the end of the primary period the customer can continue renting for an annual nominal figure. When the asset is finally sold to a third party the majority of sale proceeds are rebated to the customer by the Financial Institution.
- Low initial payment - Doesn’t tie up cash reserves
- Fixed monthly payments - Perfect for budgeting
- VAT Payable monthly - Can be claimed back quarterly
- Tax benefits - Tax allowances for business users
- Revenue - Assets are financed from revenue as you put them to work
- For a business customer the asset is reflected in the balance sheet
Operating Lease
The Financial Institution owns or buys assets that the customer wishes to use. The customer rents the asset for an agreed period then returns it to the Financial Institution owner.
- Repayments - Calculated on the difference between purchase price and expected value at the end of the lease
- Lower fixed monthly payments - Perfect for budgeting
- VAT Payable monthly - Can be claimed back quarterly
- Revenue - Assets are financed from revenue as you put them to work
- Asset - Risk of equipment ownership and depreciation is removed
Sale and Finance Lease Back
The customer sells assets that it owns unencumbered to the Financial Institution. The Financial Institution leases the asset back to the customer by way of rentals that repay the cost; at the end of the primary period the customer can continue renting for an annual notional figure. When the asset is finally sold to a third party the majority of sale proceeds are rebated to the customer by the Financial Institution.
- Cash Flow - Can raise funds against an asset recently purchased
- Other Benefits - See Finance Lease for benefits
Sale and HP Back
The customer sells assets that it has recently, (within 90 days), purchased and are unencumbered to a Financial Institution. The Financial Institution hires the asset to the customer by way of instalments that repay the cost; at the end of the hire period ownership of the asset passes to the customer for a notional price.
- Cash Flow - Can raise funds against an asset recently purchased
- Other Benefits - See Operating Lease for benefits
Sale and Operating Lease Back
The customer sells assets that it owns unencumbered to the Financial Institution. The Financial Institution rents the asset to the customer for an agreed period, the asset is then returned to the
Financial Institution.
- Cash Flow - Can raise funds against an asset recently purchased
- Other Benefits - See Operating Lease for benefits
Contract Hire (Contract Rental)
The customer selects a vehicle and specification they wish to use which the Financial Institution buys. The customer rents the asset for an agreed period then returns it to the Financial Institution. The customer can choose whether to also have additional services provided within the rental; (e.g. maintenance, servicing, repairs, up-dates, replacement assets etc).
- Fixed monthly payments - Rentals are fixed so you’ll know your costs in advance, giving you better financial control.
- All inclusive payments - By including servicing & maintenance in your monthly rental your costs will be under even greater control.
- Asset - The Finance House takes the risk on depreciation of the asset and responsibility for its disposal
Working Capital Finance, Invoice Trading and Trade Finance
When a business customer holds stock it is supporting its own working capital. When it supplies its products or services on account, they are supporting their customer’s businesses working capital until the invoices (debtors) are paid, you can also insure the debtors and the finance company can even collect the payments on the customer’s behalf.
- Invoice Finance - You sell your goods or services and raise invoices in the normal way, but instead of waiting for payment from your customer, the money is available immediately thus improving your cash position
- Factoring - Almost identical to invoice discounting except that you outsource your collections department. Leave the troubles of collecting debt to an expert and concentrate on your day to day operations
Why Broadbench?
- We have the experience and expertise to select the most appropriate and economical method to purchase your asset
- We have access to a wide range of providers and a full range of finance facilities
- We will complete all the paper work for you and keep you updated at all times
Ok, how does it work?
Contact Broadbench , discuss your requirements , we will find you the best solution to fund the purchase of your asset, if you’re happy to proceed we’ll complete all the paper work for you.
