Different Ways of Financing Assets: A Practical Guide

Different Ways of Financing Assets: A Practical Guide

Different Ways of Financing Assets: A Practical Guide

If you have a business and need to buy equipment, one of the best options is to use an asset finance company to obtain a loan. This type of loan helps reduce the capital costs of your business by reducing the amount of money you have to pay upfront. It can also reduce unexpected expenses, like repairs and maintenance. Another benefit of this type of loan is that you do not have to put up your family home as collateral.

Using Collateral for Asset Finance

Asset finance is a popular type of loan for businesses. It allows them to spread the cost of buying high-value assets over a longer period of time. Various assets, such as inventory and investments, can be offered as collateral. For example, a transport company may use its fleet of delivery vehicles as collateral to secure financing. The lender will determine how much the company can borrow based on the value of these assets.

Access New Property & Equipment

Asset finance can also help you improve your business operations. Having access to new machinery and new commercial property can help you expand your business and become more efficient. Similarly, the use of hire purchase agreements can be beneficial for your business. In these types of arrangements, you will make regular payments to the lender and may eventually decide to purchase the asset at a fixed price. You will also be responsible for paying for the insurance and maintenance of the asset.

Acquire The Assets You Need

Asset finance differs from other types of asset finance, as it lasts until the finance provider recoups the cost of the asset. In some cases, the asset finance provider may give the business a portion of the value if the asset is sold. Unlike other forms of asset finance, you will not receive any tax benefits from this type of financing. However, you can still reclaim GST from the finance company.

Asset financing is an excellent way to acquire the assets you need to expand your business. As long as you know your goals and can manage your budget, asset financing can be a great way to acquire the equipment you need. As long as you have the cash to finance the purchase, the asset financing company can provide you with the money you need.

Reduced Costs

Another advantage of using asset financing is that it is cheaper than factoring. The interest rate for an asset-based loan is less than factoring, and you will not have to put up your property as collateral. It can help alleviate cash flow issues and provide you with easy access to cash. You can use this cash to purchase new investments or cover existing costs.

Asset refinancing allows a business to expand without an initial investment. During this process, your business can use its assets, such as machinery, equipment, accounts receivables, or other assets, as collateral. This type of loan also makes it easier to access short-term loans.

What About Brokering?

Brokering can be explained easily if you look at your Finance Broker the same way you would look at your travel agent. Lenders are not always fully transparent, and it pays to have someone on your team who understands which operators are best to work with and where they may have hidden pitfalls and advantages that are not visible.

It’s like deciding to book your entire trip overseas yourself without knowing which hotels, tour operators or rental car companies are trustworthy in terms of providing a great deal. If you go with a travel agent instead, they can take care of the flights, accommodation and all the adjunct services you want, and they take responsibility for ensuring you get what you pay for. 

This service includes fixing issues – like a cancelled flight or a renegotiation with your lender – at no extra cost.

Safer, Faster, Better

When you engage GVK as your Finance Broker, you pay the same amount you would if you went directly to the lender, but the process will be safer and faster, and you will likely get a better deal on terms. You can also turn to us if you run into difficulties with repayments, and we work with your accountant to ensure they have all the information they require.

Contact us at GVK Finance if you need help applying for asset financing or have any questions about the process. We have extensive experience in the field and can reassure you that your finances are in good hands.