Asset finance cost comparison
Loan amount: £50,000
- Loan term: 1 year
- Interest rate: 22%
- Monthly repayment: £4,633
- Total interest: £5,595
Loan amount: £50,000
- Loan term: 1 year
- Interest rate: 36%
- Monthly repayment: £4,903
- Total interest: £8,831
If you're looking to purchase equipment or another asset for your business, asset finance can help make it more affordable. Use the table below to compare competitive asset finance loans based on loan type, amount and term.
Asset financing is a form of business loan that is used to cover the cost of a business asset, and which is secured against the asset itself.
Typically, it enables your small to medium-sized enterprise to access the latest necessary equipment—such as vehicles, office gear, or technology—requiring minimal upfront costs. Instead, you’ll manage smaller, periodic payments over an extended duration. However, the total cost you’ll end up paying will be greater than the outright purchase price. Nevertheless, this proves to be a valuable choice for businesses lacking instant capital for substantial single purchases.
Opting for asset financing over conventional bank loans comes with several benefits, although it may not be the best choice for every business. Here’s a detailed guide to this type of financing, with useful pointers on how to find the best deal available to you.
The following are the three main types of asset finance:
The lender retains ownership of the asset throughout the course of the agreement. Essentially, you’re renting the equipment instead of buying it. These deals may be more suitable for highly expensive machinery, vehicles or property. If you only need assets for a short time period, this could be the way to go.
The lender retains ownership of the asset until the final payment is made. Here, your regular payments cover the cost of purchasing the item, plus interest. These deals are more suitable for basic office equipment or technology. If you’d ultimately like to own the assets you’re paying for, this is the option to choose.
Where you already own assets outright, this option lets you unlock their value to spend elsewhere. You’ll make regular payments to effectively buy back the assets.
Here are the main factors to bear in mind when comparing asset finance deals:
Usually, you can apply for asset financing deals via the lender’s website. The process only takes a few minutes, provided you have the necessary details to hand.
You’ll need to provide some basic information to identify your business, including your company type, business address and limited company number.
It may also be necessary to submit financial details, including VAT returns and bank statements. The lender will then complete a credit check on your business. Your business credit score is based on your previous borrowing history and helps the lender to evaluate whether you’re a risky prospect to lend money to. Your eligibility for the best deals will be based on this score.
You’ll typically be given an instant decision on your application. However, with some lenders, this may take up to three business days.
If your business needs quick access to the best equipment, but you don’t have the capital to buy it outright, asset finance can be a useful tool. For companies with highly irregular cash flows or bad credit, it can offer access to finance when traditional bank loans may not be an option.
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