Asset finance allows you to obtain a loan using balance sheet assets (for instance machinery, vehicles, or inventory) as collateral. It provides quick access to cash for short term borrowing needs or working capital financing.
There are five major types of asset based loans:
- Chattel mortgages allow you to borrow to buy an asset (such as a car or equipment)
- Commercial hire purchase loans allow you to hire and use the asset throughout the term of the loan. Once the loans has been repaid fully, the title and asset transfer to you
- Finance leases allow you to use the asset without transferring ownership to you. You get access to the latest vehicles or equipment without tying up large amounts of capital
- Novated leases are typically used when a vehicle is included in the salary package. The employer and employee share responsibilities of the loan by signing a novation agreement
- Operating leases are typically used to finance vehicle fleets or technology purchases. The advantage of an operating lease is that payments may be considered operating costs and as such are not considered balance sheet liabilities
To learn more about how asset finance can help your business, contact a BusinessFinance.com.au consultant today.