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What is Asset Finance?

The purpose of Asset Finance is to help you manage your business cashflow by using the business' assets as security.  Types of Asset Finance include:

  • Finance Lease
  • Hire Purchase
  • Chattel Mortgage

 

Finance Lease

A Finance Lease is a contract in which you (the 'Lessee') have use of a selected piece of equipment for an agreed time frame in return for a series of rental payments to the lender (the 'Lessor').

Cash flow retention: 100% finance so cash can be retained for other purposes.
Profit forecasting and budgeting: contracts are fixed for an agreed period and involve fixed payments, allowing greater accuracy in budgeting and cashflow forecasting.
Flexibility: option to select the term and the timing of repayments to suit your cashflows.
Tax advantages: lease rentals may be tax deductible, provided the equipment is used to generate assessable income, you should seek your own taxation advice to confirm your position.

 

Hire Purchase

A Hire Purchase agreement is a contract by which the lender (the 'Owner') conveys to the customer (the 'Hirer') the right to possess and use an asset and the right to acquire ownership of the asset by making progressive payments.

Cash flow retention: 100% finance so cash can be retained for other purposes. Customer may have equity in goods by way of deposit or trade in allowance.
Profit forecasting and budgeting: contracts are fixed for an agreed period and involve fixed payments, allowing greater accuracy in budgeting and cashflow forecasting.
Flexibility: option to select the term and the timing of repayments to suit your cashflows.
Tax advantages: depreciation and interest charges relating to hire purchase transactions are tax deductible, provided the equipment is used to generate assessable income - you should seek your own taxation advice to confirm your position.

 

Chattel Mortgage

Facility whereby Customer (the business entity) takes ownership of the goods upon delivery, with the lender securing the loan by a charge over the goods. A charge is a form of security that places a mortgage over the financed goods.

Cash flow retention: 100% finance so cash can be retained for other purposes. Customer may have equity in goods by way of deposit or trade in allowance.
Profit forecasting and budgeting: contracts are fixed for an agreed period and involve fixed payments, allowing greater accuracy in budgeting and cashflow forecasting.
Flexibility: option to select the term and the timing of repayments to suit your cashflows.
Tax advantages: depreciation, interest charges and fees relating to the transaction are tax deductible, provided the equipment is used to generate assessable income - you should seek your own taxation advice to confirm your position.

 

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Difference Between Commercial & Residential Property Investment

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DISCLAIMER:  The information contained on this website is provided for general education purposes only and does not constitute specialist advice. It should not be relied upon for the purposes of entering into any legal or financial commitments. Specific investment advice should be obtained from a suitably qualified professional before adopting any investment strategy.