Asset finance is a sort of financial arrangement with the help of which one can purchase any business related equipment be it new and used cars, machinery or office equipment. As the loan can be arranged easily, many business firms take the asset finance route to expand their business infrastructure and this is adding to its growing popularity as an affordable finance solution.
Here are some major benefits associated with asset finance:
Helps in saving working capital
Buying equipment outright needs a huge amount of capital investment that at times prevents the business owner from investing in other projects. But with smaller, frequent lease payments, one can save some much needed cash and invest it in other areas of the business. It helps a company to adapt quickly to new business opportunities and meet unexpected requirements.
Helps in responding to opportunities
To take advantage of sudden unexpected opportunities, one needs money. And especially businesses are almost always in need of easy finance solutions to keep pace with latest technological developments. Timely response to the changing needs of the business holds the key to success. Asset finance is one of the quicker solutions that can be arranged in relatively shorter time.
Helps in managing the budget
Asset finance allows one to make regular fixed payments for a particular period of time leaving one comparatively free from inflation worries or changes in interest rates. Hence, it becomes easier for a business firm to plan its future budgeting.
Helps in maintaining existing credits
With asset finance, there would not be any problem in maintaining other existing credit lines arranged with a bank or other financial institutions. Hence, if necessary, a business firm is free to use other bank facilities any time.
Has a flexible nature
Under each and every asset finance agreement, a lot of meticulous attention is given to the lender’s requirements. Most of these finance solutions are tailor made to ensure that the future targets of the business can be achieved as planned.
No need for any deposit
For arranging an asset finance loan, there is no hard and fast rule for a deposit. The borrower just needs to make regular payments to repay the loan as per the terms of the agreement.
Maximum tax benefits
As the lease payments are referred to as expenses, it means the payments may be offset against taxable profits. It ultimately helps in reducing the overall cost. Moreover, the untaxed portion can be used in a profitable manner.
Payments as per the lender’s convenience
For the repayment of an assent finance loan, the lender has the flexibility to choose the repayment option. While payments can be made through direct debit, there are also provisions to choose the period – monthly or quarterly. One can decide the right option depending upon their financial conditions.
These positive factors do make it seem as if asset finance is the best solution whenever your business is in need of fast cash. But before applying for asset finance, it is advisable to understand all its pros and cons.
Rather than taking the plunge without adequate homework, it is advisable to take the help of some consulting company which is networked with the top lenders and can help you to get competitive and tailored asset financial solutions to suit your business requirements.