What is Asset Finance?
If you are looking to buy a vehicle or some equipment for your business, Asset Finance provides the money, on hire purchase or a lease agreement, normally paying the suppliers direct and collecting the repayments over an extended period. The money is secured against the asset itself, not against property etc, and means that your working capital and cash-flow is protected for what it is meant to be used for – growing your business.
In business, cash is king. By paying cash for a fixed asset it may put a strain on cash-flow. By financing your asset, you have more cash left in your business and more control over your finances. After all, the benefit of owning your asset is not instant, the benefit comes in slowly, match this to your repayment period and an affordable monthly cost.
With Hire Purchase you get to own the goods by paying an option to purchase fee with the last payment.
Finance Leases often have 3 options when you have come to the end of the agreement, You can return the equipment back to or Ask us to extend the term of the lease for an additional period of 25 years for one further monthly rental, or Discuss how we can upgrade the equipment on new lease terms. This would be subject to credit approval at the relevant time.
Contract Hire and operating leases give the user no ownership, at the end of the lease you would be expected to return the goods and possibly pay for excess use or mileage and any repair costs to bring the asset up to standard if it is damaged.
Hire Agreements are normally a rental where the supplier or third party takes ownership of the goods at the end of the lease. These types of agreements are normally seen when financing IT equipment and copiers.
Simply call one of our friendly team on 01603 381955 or complete the online quote request form and we will get you a quote almost instantly.
We can assist with finance for anything from around £1,500 to £15,000,000. Almost nothing is too big or too small. Our average balance is around £25,000.
The simple answer is ownership however there are also two other main areas of difference.
Firstly the treatment of VAT on commercial vehicles is generally different, with full vat on the cost of the goods payable in advance on Hire Purchase and VAT payable on the monthly payments, spreading the VAT across each rental.
Secondly some leases may become ‘off balance sheet’, which means that neither the asset nor the liability appear on the balance sheet. Just the net payment, treated as a direct overhead cost. HP is always ‘on balance sheet’ meaning the asset appears in your Fixed Assets and the balance outstanding in your liabilities. The HP interest is an allowable expense of the business.
Some finance leases, because you have a benefit in the residual sale proceeds, are treated very similarly to Hire Purchase and capitalised as leased assets. Realistically you should speak to your accountant for the best advice specific to your circumstances.
Finance for new start businesses is most definitely available. It does depend on your personal credit rating more, the structure of the deal etc. For vehicles, credit is readily available regardless, for equipment it may be harder and the rates may be a little more, or the lenders may require slightly larger deposits, but we have the flexibility and the knowledge to put the case for credit to the right lender first time ensuring we give it the best chance to be approved.
The process is made very simple for you. Service for us is everything and we aim to make the process painless for you. From initial discussions to you taking delivery of your new car or equipment could be as little as 2 days, so whatever you are buying and however quickly things need to be sorted, you can trust Credo to get it right.
Where your agreement is regulated by the Consumer Credit Act the customer has the right to `Early Termination`. Your Credit agreement will state if it is a regulated or non-regulated agreement.
You would have had to have paid over half the `Total Amount Payable`, the vehicle needs to be in `good repair` and you are up-to-date with all the payments on the agreement.
If you have a PCP contract you will need to be under your contracted mileage, at the time of termination and if you have exceeded it you will need to have paid the penalty charge.
If you are thinking of terminating your agreement you would need to have checked the above against your paperwork and then you will need to contact the finance company in writing to express your right.
If they agree with you they will arrange collection of your vehicle and your account will be settled in full.
This is an ideal way of coming out of an existing finance deal where your finance maybe more than your current vehicle is worth.
If you would like to discuss this further please feel free to contact us on 01603 381955.