Asset Finance

What is asset finance?

Asset finance includes a range of different loan structures that can help your business buy vehicles or equipment.

Types of asset finance

Chattel mortgage

Also known as an equipment loan. A business borrows money to purchase an asset. The business owns the asset outright, but the lender uses the asset as security until the business repays the loan. This frees capital and ensures the business has security against the loan.

Hire purchase

The lender purchases the equipment and rents it to the business. At the end of the term, assuming all payments are made, the business takes ownership of the asset. This is a popular way to spread the cost.

Finance lease

The lender owns the equipment and the business pays a hire fee for use. In some cases, the business may be able to purchase or refinance the asset at the end of the set term, which gives flexibility.

Operating lease

The lender owns the equipment and the business pays a hire fee for use. The business does not take ownership of the asset. The costs are deemed operational expenses.

Novated lease

A Novated Lease involves a three-way agreement between an employer, an employee and a lender. The Novated arrangement involves the employee leasing the vehicle directly from the lender. The employer will then agree to deduct lease rentals from the employee’s salary during the term of employment and to pay the rentals directly to the lender. The employee has the use of the vehicle for personal purposes. Whether it’s cash flow or capital, businesses need money. It’s good to know there’s a loan to suit every business. Contact your mortgage broker for more information about commercial and asset finance.