Asset Finance

What is Asset Finance?

Asset Finance provides a company with the ability to release the equity out of high value assets such as equipment, vehicles, and plant/machinery. It also can provide a business with the opportunity to purchase assets for growth without the requirement to use up much needed cash reserves. This is achieved by spreading the cost over an agreed period which can be tailored to match your cash flow. You have the use of the asset throughout the term of the agreement and interest is charged in addition to the cost of the asset. At Clarity Commercial Finance we have several Asset Finance solutions available, please see an overview of them below.

Hire Purchase

Hire Purchase is a form of on balance sheet funding whereby the Vat can either be paid up front or deffered in the form of a VAT deferral for up to 4 months until the VAT is received back from HMRC by the borrower. Terms typically vary from 12 -84 months dependant on the asset and transfer of ownership may require a small fee at the end of the agreement.

Balloon payments and bullet payments can be used to reduce the monthly rental.
There is also the option for a variable rate agreement, where the payments track the finance house base rate, LIBOR, or Bank of England Base Rate dependant on the funder. This allows for reduced interest penalties for early settlement. However, the monthly payments may increase or decrease dependant on market fluctuations.

Finance Lease

A Finance Lease is also on balance sheet funding however the Lender is typically the legal owner of the asset for the duration of the lease. The borrower operates and maintains the asset and owns a share of the equipment. The benefit of a finance lease is the ability to spread the Vat over the term of the agreement, however at the end of the agreement a proportion of the residual value of the asset must be paid to transfer ownership.

Operating Lease

An Operating Lease can be either On or Off-balance sheet funding. As opposed to a Finance Lease, there is no option to pass title to the borrower at the end of the agreement.

The benefit being that the borrower is not liable for the residual risk and is a great way to reduce the monthly rental.

Refinance / Equity Release

There are two main ways to release the equity out of your existing unencumbered assets. This being either Sale and HP back or Sale and lease back. If there is finance still outstanding on the asset (s) this can be settled by the funder as part of the transaction. This enables the borrowers to re-adjust their finance facilities to enable more attractive or suitable terms. A percentage of the current market value is released back to the customer and spread over a negotiated term as a HP or Lease agreement.

Our Process

Application
Firstly, we like to meet the client and truly understand their intrinsic needs, cashflow requirements and future buying plans.

Credit Assessment
We then evaluate the financial information provided, along with the client’s specific requirements and we will assess which of the 80+ Funders that we have on our panel, would be most suitable. We will then put together a bespoke financial solution to achieve the client’s goals.

Approval
Once finance is approved, we carry out all the work dealing with suppliers and arranging the necessary paperwork to be signed with the client at your convenience.

Let's start a conversation

We’d love to understand how we can help achieve your personal and business goals.