What is asset finance?
Asset or equipment finance is borrowing money to buy the assets your business needs to operate. It allows you to break the cost of your new asset into smaller, more manageable repayments over the course of its lifetime, or to rent the asset from the provider allowing you to upgrade when necessary.
Asset finance is about getting the equipment you need to grow, run and maintain your business without tying up large amounts of your capital and available cash flow.
What can I finance?
- Motor Vehicles
- Cars, utes, light vehicles
- Forklifts, cranes, earthmoving equipment
- Equipment – Office equipment, manufacturing equipment, industrial plant
- Technology
- Fit-outs
What do I need to get this type of finance?
- Must be purchasing traditional assets (must be easily valued by the banks)
- The asset value must be over $5000
- Good cash flow and balance sheet history
- Good credit history
What are the benefits of asset finance?
- Doesn’t tie up your available working capital
- Less impact on cash flow than outright purchase
- Spread cost of the equipment over its useful life
- Repayments can be tax deductible
- May be able to claim GST input credits
- Ability to keep up with changing technology
What types of asset finance are there?
| Asset & Equipment Finance options | |
|---|---|
| Chattel Mortgage or Equipment Loan |
This is a loan agreement where funds are borrowed by the customer to purchase equipment. The customer provides security for the loan by the Lender taking a registered mortgage over the subject asset. |
| Commercial Hire Purchase |
A Commercial Hire Purchase (CHP) is an agreement between a customer and the Lender to purchase equipment for business use. Under the agreement, the Lender gives the hirer possession and use of an asset in return for regular payments. When the final payment is made, ownership of the equipment is transferred to the customer. |
| Finance Lease |
The Lender purchases the asset at the customer’s request and rents it to them for an agreed period, usually 2-5 years. During the term of the agreement the Lender owns the equipment and the customer enjoys the use of the vehicle or equipment in return for rental payments. This type of transaction must have a residual value. |
| Operating Lease |
An operating lease is an agreement to rent equipment from the Lender (‘Owner’) for a fixed period of time. This product is suitable for businesses that require flexibility in their asset/disposal, especially if continually upgrading. Provides a mechanism to return goods at the end of the rental term without penalty assuming return conditions have been met. |