What is Asset Finance?

In its simplest terms Asset Finance is a type of secured finance where the lender will take a security interest in an asset. It’s changed a lot since the days where it just used to be machinery, cars, yellow goods (JCBs etc..) and now covers a broader range of assets even ‘Small Ticket’ items down to £2K in capital value. It generally still covers business critical assets for example a fleet of lorries for a logistic company or a coffee machine for a café. This broad range means that asset finance is accessible to businesses across different sectors.

The different Forms of Asset Finance

There are a variety of ways you can use asset finance and structuring a deal can be very bespoke to the individual, business and asset type. In summary

  • Hire Purchase – This is where you spread the cost of the asset over a period of time. The asset appears on your balance sheet and because you own the asset you are responsible for maintenance and associated costs. At the end of the term you will have full ownership of the asset
  • Equipment Leasing – This is where the lender owns the asset and rents it back to you. At the end of the lease period you can either continue to lease, upgrade to a new piece of equipment or hand it back
  • Other forms include – Finance Lease, Operating Lease, Lease purchase, Contact Hire, Refinance.

Soft vs Hard Assets

Traditionally asset finance has been available for hard assets but now more and more lenders are accepting soft assets. The table below provides some examples on the different types of assets

Hard Assets Soft Assets
Commercial vehicles; HGVs, LCVs, trailers IT & Communication Equipment
Machinery - Engineering & Manufacturing Security Equipment
Construction equipment; yellow plant, mobile cranes... Play Equipment
Agricultural plant and machinery Office Equipment
Coaches, buses, minibuses & motorhomes for commercial use Shop Fittings & EPOS equipment
Company & director's cars Medical & Dental Equipment
Print & Packaging Gym Equipment

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