What are the different finance options for purchasing an asset?

different finance options for purchasing an asset

Asset finance is a type of lending that enables you to access business asset such as equipment, machinery and vehicles without having to buy them upfront. In this post we share the different asset finance options you have available when looking to purchase an asset – if you’re unsure or would like more information then do get in touch with Dorsia Finance as we can help advise and organise asset finance for you.

Here is a summary of five asset finance options and how they work.

1. Hire purchase

With hire purchase, the finance company will purchase the asset for the business to use and the business will then make monthly payments for a set time. Once the final payment has been made the business can choose to purchase the asset for a fee.

2. Equipment finance

Equipment finance, or equipment leasing is used to describe a loan or lease that is used specifically to obtain business equipment. This is any kind of tangible asset (other than property) and can include plant machinery, company vehicles or even office furniture. Equipment finance is a flexible funding arrangement where the business will agree to make payments for the use of the equipment over a set period and at the end of the contract they have either purchase it, extend the lease or return the asset.

3. Asset refinancing

Asset refinancing helps you to release capital tied up in the assets you already own so is a great option for helping with cash flow. By using your assets as collateral you can access a line of credit to raise funds.

4. Operating lease

An operating lease is another flexible funding facility that works in a similar way to equipment finance. It is a short term option which means that the overall costs are lower, but the monthly payments are higher. It is a great solution if you’re a business in need of equipment for a set period of time.

5. Finance lease

The last option is a finance lease which is where a leasing company will purchase an asset on behalf of its customer and the business will essentially hire it from the finance company. For the duration of the agreed period, the business is responsible for the maintenance and repair of the equipment, and it will appear on balance sheets.

Want to know more or obtain a quote? Get touch by emailing info@dorsiafinance.co.uk or giving us a call on 01522 420 420. We are an asset finance and car finance brokerage based in Lincoln but work with clients nationwide.

Scroll to Top