Asset based finance
What is asset based financing?
Asset Finance is a financial instrument where the principal security for the debt is title over the asset financed.
It takes the form of HP where title will revert to the borrower or lease where the borrower rents the asset and does not take title at the end of the financing period.
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How does asset financing work?
The borrower selects / sources the asset required, the vendor sells the asset to the funder, who then finances the asset to the borrower who benefits from its use.
Benfits of asset financing
Primarily Asset finance is a second source of credit that leaves bank facilities free for working capital requirements for which they are best suited.
There may be certain tax breaks for types of asset based leasing finance.
What are the costs of Asset Finance?
In simple interest terms, asset based finance can cost between 3.8% to 7% per annum depending upon asset financed, structure and covenant of the hirer
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