Asset finance is a popular option for businesses as it allows them to spread the cost of purchasing assets over a longer period of time, which can help with cash flow management. Additionally, asset finance can provide tax benefits, as lease payments are often tax-deductible.
There are several types of asset finance, including chattel mortgage, hire purchase, finance lease, and operating lease. Chattel mortgage involve agreement where a movable personal property, such as a car, truck, equipment or machinery, is used as collateral for the loan. The borrower retains possession of the chattel (property) but the lender has a security interest in it until the loan is fully paid off. Hire purchase involves the business paying for the asset in instalments over a set period of time, with ownership transferring to the business at the end of the term. Finance lease involves the finance provider owning the asset and leasing it to the business for a set period of time, with the option to purchase the asset at the end of the term. Operating lease is similar to finance lease, but typically involves shorter lease terms and lower payments.
Overall, most popular type of asset finance is Chattel mortgage as it offers the ownership of the asset and tax benefits to the business.
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