5 Things You Need to Know About Asset Finance

Running a business often means balancing the need for growth with the realities of cash flow. That’s where sorting through the many policy options for business asset finance NZ has to offer comes in.

Whether you’re looking to purchase essential equipment, expand your fleet, or simply upgrade technology to stay ahead of the curve, asset finance can make it happen without tying up your working capital.

Before you sign on the dotted line, here are the top five things you need to know.

1: It’s different from traditional lending

Unlike traditional business loans, business asset finance is tied directly to your purchasing asset. This means the asset itself often serves as collateral, making it easier to access financing even if your credit isn’t perfect.

Instead of borrowing a lump sum to use however you like, business asset finance in NZ is designed to be purpose-driven. You pay for the asset you’ve bought over time, allowing you to preserve your cash flow while still benefiting from the tools or equipment your business needs.

2: There’s more than one type of business asset finance in NZ

Asset finance is not a one-size-fits-all solution. You can choose from several options in New Zealand, depending on your needs. Each type has advantages and disadvantages, making them uniquely suited for particular businesses.

For example, a hire purchase agreement allows you to make regular payments while using an asset, and you’ll finally own it once the final payment is made. On the other hand, an operating lease is better for short-term needs and lets you return the item at the end of a lease period (great for businesses where new technology is often needed).

3: It’s great for businesses that want to scale

Business asset finance in NZ is a game-changer for businesses focused on growth. Instead of waiting years to save up for expensive purchases, you can acquire important assets and start using them immediately to scale your business.

This is hugely beneficial outside of immediate access to the latest equipment because it preserves your cash flow. Rather than dropping a lot of capital on a single high-value asset, you get to budget for a predictable cost over a set amount of time while still having access to the equipment that will help your business scale.

The keyword here is ‘sustainable’, not in the eco-friendly sense, but in the ongoing sense. Asset finance lets you scale predictably, carefully, and without jeopardising your cash flow. This is why it’s an everyday reality for all sorts of industries nationwide.

4: You need to qualify for it (which is fairly simple)

Like most loans, you need to qualify for almost every business asset finance policy NZ offers. This is usually a lot more straightforward than traditional loans, although there are a few boxes you’ll need to tick:

•       A solid credit history. Your asset will be collateral, but you’re more likely to secure a good loan from a reputable company if your credit is intact. That said, there are reputable options you can find if your credit isn’t quite up to scratch. You might just need some help to navigate them.
•       Up-to-date financial records. Showing that your business has stable cash flow and sound financials will improve your approval chances.
•       Asset and business suitability. Only certain kinds of businesses can acquire asset finance for relevant equipment. For example, a farm could acquire funding for a top-of-the-line tractor, but a logistics business might have a harder time with this.

When it comes to securing these loans, working with an asset finance specialist or broker can seriously simplify the process. Rather than wading through your many options and going back and forth to solidify

5: It’s best to be careful when choosing your policy

While business asset finance in NZ offers plenty of flexibility and benefits, it’s also important to approach this process with care. There are hidden costs to look out for, including early repayment penalties, administration fees, or other charges that might be buried in the fine print.

Depreciation also plays a role here, so ensuring your loan’s repayment terms align with how valuable your assets are and how long they will last is important. This ties heavily into your loan’s commitment terms, basically how long you commit to owning, leasing, or paying the asset off.

Our best piece of advice for seeking a high-quality policy – apart from choosing a reputable provider like GVK – is to step carefully. Take the time to review policies, ask questions about anything you’re not clear on, and make sure you know what you’re signing!

With that, we’ve reached the end of our list. As you can see, the flexibility to spread costs for a vital asset over time is a major win for all sorts of businesses across New Zealand. This is why so many owners choose to avail of the many policies for business asset finance NZ has to offer.

By understanding your options, qualifying criteria, and potential risks, you can leverage this particular solution and walk into the commitment with your eyes wide open.

Find the asset finance policy your business needs to go to the next level.

Scaling your business or replacing a vital asset to keep everything running smoothly? The team at GVK Finance is here to help. We’re well-versed in New Zealand’s asset finance sector, and we’re here to guide you through the process of finding your perfect loan from start to finish.

Apply for asset finance today to unlock your business’s potential.