Asset finance solutions
Hire purchase
Hire purchase gives you access to assets without paying for them upfront. You effectively ‘hire’ the asset from the lender then make the agreed monthly repayments. At the end of the term, you own the asset.
You can choose the length of the term, which usually lasts between one and six years. There can be fees to pay both at the start of the term (for example, a deposit) and at the end (to secure the asset).
If you default on payments, you may lose the asset.
Finance lease
Finance leasing doesn’t give you the option to own the asset. Instead, you rent the asset from the finance provider, making agreed payments – usually until the provider has made the money to cover the cost of buying the asset.
If the provider sells the asset at the end of the term, they might give you a percentage of the sale value.
Equipment lease
Like finance leasing, equipment leasing lets you rent the asset from the finance provider and make agreed payments.
But at the end of the term, you have different options. You could continue to lease the item, or buy the asset. You might want to upgrade the asset and continue to make payments, or just return it to the provider.
A benefit of equipment leasing is that maintaining and servicing the asset is often down to the provider, not you as the renter.
You also won’t be stuck with out of date equipment, as you can upgrade by leasing a newer model after the initial term.
Another form of equipment leasing is operating leasing, which is usually used for specialist machinery or equipment that businesses only need for the short term.
Asset refinance
Asset refinancing uses your existing assets to unlock funding.
One way this works is by using your assets as security against a loan, meaning you might lose the assets if you default on your repayments.
Another form of asset refinancing involves you selling an asset to the finance provider, which they then lease back to you. You make repayments over a set term.
You can use asset refinancing even if you don’t own assets outright, but you can only access up to the level of equity tied up in the item.
So if you’ve got an asset that you don’t own (for example, under a hire purchase agreement) and you’ve repaid £10,000 of the £12,000 term, you could get asset finance valued at the £10,000 equity (with around 70 per cent of that amount available to borrow typically).
Contract hire
Contract hire providers lease vehicles to businesses, who make the agreed repayments over a term.
You don’t get the option to own the vehicles. Maintenance and servicing rests with the contract hire provider, which can save you time and money.
