The 7 most asked questions I get asked about Asset Finance
1. What is asset finance?
It is a finance option businesses can use to grow by acquiring much needed equipment, such as vehicle fleets, farm machinery and even aircrafts. You pay a regular amount to use the asset over an agreed period, avoiding the full cost of buying outright.
2. What is the difference between asset finance and loan?
With asset finance, the lender secures the loan against the asset, whereas a bank loan is based on your business's creditworthiness. For that reason, with asset finance, the finance lender owns the asset until you fully pay the finance. However, you can purchase and own the asset upfront with a bank loan.
3. Is asset finance easy to get?
Like a bank, asset finance providers will seek evidence that businesses can make their payments before they offer an agreement; however, they can secure any loans against the asset. This often makes it easier to obtain asset financing than a traditional loan.
4. What are the benefits of asset finance?
Asset finance is a popular financing option because payments are spread out over an agreed term, which frees up working capital and at a fixed rate allowing regular payments to be budgeted and entered into your cash flow.
5. What is an example of asset based finance?
An example of asset-based finance would be purchase order financing; this may be attractive to a company that has stretched its credit limits with vendors and has reached its lending capacity at the bank.
6. Is asset finance a debt?
Asset financing refers to the use of a company's balance sheet assets, including short-term investments, inventory and accounts receivable, to borrow money or get a loan. The company borrowing the funds must provide the lender with a security interest in the assets.
7. What are the 4 types of assets?
Assets can be broadly categorized into current (or short-term) assets, fixed assets, financial investments, and intangible assets such as cash, stocks, bonds, mutual funds, and bank deposits. Unlike land, property, commodities, or other tangible physical assets, financial assets do not necessarily have inherent physical worth or even a physical form.
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