Asset Finance – How It Works
Asset finance enables businesses to access essential equipment without the burden of a hefty upfront cost. By spreading repayments over time, companies can maintain healthy cash flow while securing assets that drive growth.
Hire Purchase – For Eventual Ownership
Hire Purchase (HP) functions much like a secured business loan. While you make an initial deposit followed by monthly repayments covering both interest and principal, the asset remains under the lender’s security until you complete your payments. This option is best if the asset will continue to be valuable long-term and you desire full control without usage restrictions.
- Suitable for assets that retain value beyond the finance term.
- Maintenance and insurance are typically your responsibility.
Finance Leasing – Flexibility with a View to Ownership
Finance Leasing takes asset depreciation into account. The repayments are calculated based on the anticipated depreciation over the lease term. For instance, if a piece of equipment is valued at £50,000 and is expected to depreciate by 75% over five years, the residual value would be around £12,500. Your monthly payments will cover this depreciation cost plus lender fees and profit.
End-of-Lease Options:
- Extend the Contract: Renew the lease on similar terms.
- Upgrade the Asset: Return the old asset and lease a newer model.
- Purchase the Equipment: Make a final balloon payment to take ownership.
- End the Lease: Simply return the asset.
This option is ideal if you expect the asset’s value to decline or if you want to retain the flexibility of deciding on ownership at the lease’s end.
Operating Leases – Rent Without the Hassle
Operating Leases function much like traditional rental agreements. Here, the leasing company owns the asset and handles maintenance, support, and insurance. This model is particularly attractive for vehicles or other equipment where you prefer a worry-free experience without the long-term commitment of ownership.
- Typically more expensive monthly but includes comprehensive maintenance.
- Restrictions may apply (e.g., mileage limits on vehicles or limitations on modifications).
The Purpose of Our Eligibility Checker
Our calculator is designed to assess your business’s needs and match you with the right asset finance options, including:
- Hire Purchase (HP): Ideal if your goal is to eventually own the asset.
- Finance Lease: Offers flexibility, letting you upgrade or purchase at the end of the term.
- Operating Lease: Provides short-term use with maintenance included, minimising the administrative hassle.
The tool clarifies repayment terms, lender requirements, and eligibility—all without the need to commit to an application. It’s perfect for standard scenarios like financing a single asset or comparing repayment options, while our team is on hand for more complex requirements.
How the Calculator Works:
A Step-by-Step Breakdown
Step 1: Enter Your Company Details
- Company name and structure (e.g., limited company, sole trader)
- Trading history (e.g., “2+ years” or “Under 12 months”)
Many lenders require a minimum trading history (typically 6–12 months) for larger loans. While startups might qualify for smaller amounts, a proven track record generally leads to more favourable terms.
Step 2: Define Your Funding Requirements
- Loan Amount: Ranges from £25,000 to £25 million.
- Asset Type: Choose from categories such as machinery, vehicles, or specialist equipment.
- Repayment Term: Typically between 1–7 years, aligned with the asset’s economic lifespan.
- Urgency: Indicate if funds are needed immediately or for future planning.
Output Example:
- Offer: Eligible for a Hire Purchase agreement at £2,800/month over 5 years.
- Additional Option: A residual value (balloon payment) of £15,000 may be available if you choose to own the asset outright.
Step 3: Provide Your Financial Overview
- Revenue Indicators: Information on card payments or B2B invoices to highlight regular cash flow.
- Homeowner Status: This may be factored into credit assessments.
- Summary of Needs: A brief description (e.g., “£75k for refrigeration units”).
Steady card revenue or regular invoicing can qualify your business for lower rates. Homeownership, for instance, strengthens your application for unsecured loans by demonstrating financial stability..
Step 4: Review Your Eligibility Results
After submitting your details, the tool provides:
- Pre-Approved Options: A side-by-side comparison of available finance types, rates, and terms.
- Next Steps: Guidance on contacting an advisor to finalise your application.
Example Output:
- Eligibility: Approved for a Finance Lease on a £50,000 excavator.
- Terms: A 4-year term at £1,200/month, with an optional upgrade after 3 years.
If no match is found, the tool may suggest alternatives like asset refinancing or adjusting your loan amount to better suit your situation.
Step 5: Complete Your Application Submission
Once you select an offer:
- Documentation: Upload asset quotes, financial statements, or invoices via our secure portal.
- Advisor Review: A specialist will verify your details and answer any questions.
- Funding Timeline: Most approvals are processed within 48 hours, so you can quickly put your plan into action.
Key Features of Asset Finance Through Our Calculator
- Flexible Funding: Whether you’re financing new, used, or auction-purchased assets, our options span a variety of sectors—from agriculture and construction to healthcare and renewables.
- No Age Limits: Finance older equipment provided it holds measurable value.
- Tax Efficiency: Certain agreements, such as Finance Leases, may allow you to claim VAT and depreciation benefits.
When to Use the Calculator vs. Booking a Consultation:
- Use the Calculator: For standard scenarios, such as purchasing a single asset (e.g., a £30k delivery van) or comparing repayment terms for machinery.
- Book a Consultation: For complex needs, mixed finance structures, rare or unique assets (e.g., fine art, vintage vehicles), or for refinancing existing agreements
Next Steps: Explore Your Options Today
Asset finance is an invaluable tool for businesses looking to invest in growth while managing cash flow efficiently. Whether you’re a start-up or an established company, our Asset Finance Calculator and Eligibility Checker help you explore options tailored to your needs.
Ready to take the next step?
