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Asset finance is a type of financing that allows businesses to purchase assets such as vehicles, equipment, and machinery without having to pay for them upfront. Instead, the asset is used as collateral against which the lender will provide a loan. The loan can be used to purchase the asset outright or to lease it from the lender.
Asset finance can be beneficial for businesses because it helps them acquire the assets, they need to run their business or to grow it without tying up their own capital. This means that businesses have more cash available for other investments or expenses. It also gives businesses access to assets they may not have been able to afford if they had purchased them outright.
If you have your eye on some asset you just know will take your business to the next level but you don’t have the funds to buy it, then we have a variety of collateral-based loan solutions for you.
An HP agreement means that you don’t have to hand over a large amount of money up front in order to buy a costly asset. You usually have to pay a small deposit upfront, like 10%-20% of the total cost which you pay to the machine seller, and then the lender pays the remaining cost of the machine directly to the seller. This way you buy the asset and become the owner of it, and at the same time lender has put a charge on this asset which means lender has secured it’s loan against the asset. You then you pay off the loan amount plus interest on it, in simple and regular monthly instalments that are right for you and your business. You can decide to pay a smaller monthly instalment over a longer duration, or a higher monthly instalment over a shorter duration. You have the flexibility to choose. The best part is that you become 100% owner of the asset after you have paid the final monthly payment.
Of course, this does mean that you cannot sell the asset until the debt has been paid off. You would also be expected to maintain the product and look after it throughout the life of the agreement. Choose your repayment term, from 12 to 120 months and spread the cost at a rate that suits you. This type of agreement is very popular throughout the UK and the rest of the world for its simplicity and accessibility.
If you think the technology behind the asset might become outdated in a few years, and you will need a new asset again at that point, a finance lease would be more suitable for your situation. Here usually you don’t have to pay any upfront deposit from your pocket, and the monthly instalments are also lower as you’re covering the cost of the predicted depreciation, wear & tear, and the interest part only, and not the entire cost of the asset. In this scenario, you gain the right to use a particular asset through regular payments. In effect, you are renting the asset in question from them lender for the duration of your leasing. At the end of the duration, there will still be a large amount owning on the asset.
Once the finance leasing duration has passed, you would then be able to choose to carry on renting by keep repaying the monthly repayments for a longer period, or you can take over the asset by paying a pre-decided lump-sum payment, called the balloon-payment, or you can decide to give the asset back to the lender or part exchange it for a new asset.
Asset Finance Leasing is more like renting with a buy option, where the Lender remains the owner of the asset, unless you exercise your buy option and pay the pre-agreed balloon payment.
Please note that in all cases you will be liable for the upkeep and any insurance for the product during the time you are renting it.
Monthly payments under finance leasing are much lower than hire purchase due to the fact that at the end of the loan term lender remains the owner of the asset under finance leasing, which helps them recover a share of the cost by selling the asset or by renting it again. While in HP customer becomes the owner of the asset at the end of the term, hence lenders have to recover all the costs, plus interest from the loan repayments only, and hence is why the monthly repayments are high in HP as compare to finance leasing.
HP is more suitable if you think the asset can benefit your business for a very long time and you want to own the asset after the loan duration.
Finance leasing is more suitable if you think the asset is good to help your business for a few years only, and you would like to buy or use an upgraded version of the asset post the loan duration.
With this option, if you already have equity in a particular asset, then it may be possible to get a loan based around that. The way it works is quite simple. If, for example, you bought something on hire purchase, but still have some payments left to make, you would look to raise capital based on how much of the asset you currently own.
Often we will pay off your original lender, (depending on what is left) and you will receive your loan directly to your bank account.
We can have a look at a specific example to see exactly how it works. Let’s assume that you bought something on HP for £7,000 and have already paid £6,000 off. We would pay the remaining £1,000 to the hire purchase company, take temporary ownership of the asset, (which you would continue to use as normal), then you would receive a percentage of the item’s overall value. You would make the repayments in full until such time as the debt has been paid and the item is yours again.
If there is a type of asset finance you are interested in that you cannot see here, then please let us know and we will do our best to help you.
You choose the terms, we do the math.
Check your affordibility with our Business Loan calculator and make an informed financial decision.
Below are some of the reasons why so many brokers view asset finance options as some of their most popular products.
There are a wide range of goods that can be considered suitable for financing. For example, most types of vehicle over a certain price level are acceptable, (everything from cars to HGVs to buses and coaches). Then of course there are all the different kinds of machinery and tools that are essential to businesses, as well as plant equipment and even buildings and land. Anything you have of value could be suitable to use as collateral. Come and have a chat with our experts and let us advise you on how you could turn your inventory into cash.
There is quite a range to choose from and it’s important that you pick the right type of financing that serves your business model the best. You need to think about such things as the tax ramifications of owning or renting the product. As the agreement is likely to be over a number of years, you should anticipate whether your business will still need the item years from now. Give us a call or drop us a message and we’ll arrange a no-commitment chat with you, which will allow us to talk you through the various options available, so we can see what works best for you.
Our team has been in business for a long time and there are few in the industry who can match our expertise when it comes to finding the right kind of asset finance for the right kind of customer.
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Lenders make small business loans, especially for small businesses that don’t have lots of assets or cash in reserve. That means that they often need to borrow money at affordable rates to solve short-term cash flow issues, or if they need to invest quickly in an opportunity. Small business loans tend to be flexible and offer choices of repayment options.
Lenders understand that small businesses face unexpected issues with their finances. You can use small business loans to help with temporary cash flow problems, like a late-paying client or an unexpected bill. You can also use finance to help your business grow and invest in the future. For example, when you want to buy stock and equipment to cover a rush of orders.
Lenders make small business loans to suit the needs of a range of small businesses. Whether you have a Limited Company, a start-up, or you’re a sole trader, there will be a loan that suits your needs. Some lenders offer loans for people with poor credit or unusual circumstances. That’s where using a loan broker like LoanTube comes in handy.
Small business loans can cover a variety of UK business needs. Secured loans usually give you lower repayments and let you borrow more, but you could lose your collateral if you can’t keep up repayments. Unsecured loans give you faster access to money with fewer checks. However, you pay a higher rate of interest and often can’t borrow so much. As well as these, you could choose Business Credit Lines or Revolving Credit Facilities. These types of loans give you access to credit, like an overdraft, but you don’t have to use all of it. Furthermore, you only pay interest on what you borrow.
Depending on the type you choose, your repayments could last a few months to up to five years. Usually, the shorter the term of the loan, the greater the repayments are. Most people want to pay their loans off as soon as possible, however, it’s often better to have affordable monthly repayments for a longer term than struggle with fewer, unaffordable repayments.
You can find it hard to get finance if you have bad credit or you’ve been turned down by lenders in the past. However, some lenders specialise in bad credit loans and will give you finance if they are happy that you meet certain criteria. That’s when using a loan broker, like LoanTube, can be helpful. LoanTube will search the market for you and advise you on lenders likely to give you credit, saving you time and applications.
We know the loan market can be confusing. There are so many lenders and loan products, it’s hard to know where to start, and no one wants to be turned down for credit. When you choose a loan, you need to make sure the repayments are affordable. You also need to know what will happen if you can’t keep up repayments, or if you want to repay early. LoanTube explains the different options open to you and we give you our expert advice.
If you need money fast, you could get a quick loan within 24 hours of applying, as long as you meet the lender’s requirements. Often, repayment interest will be higher than other small business loans and you may need to repay what you owe more quickly.
LoanTube works with many lenders across the United Kingdom. You could borrow between £5,000 and £500,000.
LoanTube helps UK firms access business finance through multiple direct lenders. We are an introducer and do not provide loans ourselves.
Think carefully before securing debts against your home or your assets. Your home and assets may be repossessed if you fail to keep up with repayments on debts secured against it.
All loan approvals & quotes are subject to credit checks and affordability requirements by lenders. If your business meet the lender’s criterion, you can borrow the money. We as a broker make an attempt to process your application with the most suitable lenders in our panel.
LoanTube is a credit broker and not a lender.
Warning: Late repayment can cause you serious money problems. For more information, go to MONEYADVICESERVICE.ORG.UK
The rate you are offered will depend on your individual circumstances.
Representative APR Example: Amount of credit: £50,000 for 24 months at £2,339.38 per month. Total amount repayable of £57,348.69 Interest: £7,348.69 Interest rate: 14.4% pa (fixed).
14.4% APR Representative. Loan term lengths between 3 and 60 months.
