Asset finance is an elaborated loan structure that helps any business organization buy equipment such as heavy machineries or vehicles. There are several loans that fall under the category of asset finance including:
Finance Lease
In a finance lease, the lender owns the equipment & the business organization pays the relevant fees in order to use it. However, the organization may choose if they want to buy the equipment or not at the end of the term. This term provides flexibility.
Equipment Loan (Chattel Mortgage)
In case of equipment loan, it allows the borrower to get a loan for purchasing an asset. Here the borrower(business) owns the asset, but the lender keeps the asset as ‘security deposit’ until borrower completes the repayments.
Commercial Hire Purchase
Similar to Finance Lease, here the lender owns the equipment and the business organization pays higher fees to use it. However, in this case, your business can take full ownership of the asset at the end of the agreed term.
Operating Lease
Just as Finance Lease & Commercial Hire Purchase, here the lender owns the equipment and the business pays hire-fees to use it. But the prime difference is there is no option available for the borrower to purchase the asset.
Novated Lease
A novated lease is a triangular financial arrangement (Deed of novation) that includes a financial lender, a business organization and an employee. Here, the organization borrows money from the lender for a motorized vehicle, which the employee then leases from the organization. The business keeps the ownership of the vehicle until the employee repays the loan from his gross salary.
Talk to our financial broker today about your asset finance options.