Business equipment and car finance is the most popular method of building an asset base for your business which leads to generating income and cash flow benefits. Asset Purchase is the appropriate option for your business if the ultimate intention is to own the vehicle or equipment outright. Asset Purchase gives you the vehicle or equipment of your choice in exchange for regular payments over an agreed period of time – terms range from 1 to 5 years. Upon making the final payment, you take ownership of the car or equipment.
Deciding on the type of finance most suited to your business needs and circumstances can be challenging. There are a number of finance options that can be utilised to purchase business assets. Therefore, it is important to consult with us so that we can explain the available finance solutions and approach best suited for your business circumstances.
The most common Finance Options for Business Asset Purchase include:
- CHATTEL MORTGAGE – (Equipment Loan): This is the most common type of Business Loans. Chattel Mortgage Finance can be provided for the purpose of buying business equipment and business vehicles where you would be the registered owner of the equipment on delivery of the equipment, machinery or car. The financier essentially lends you the funds to purchase the equipment and then registers the mortgage over the equipment as security. Once the loan amount is fully paid out, the lender’s interest is removed and you enjoy a clear title over the equipment.. Find more about Chattel Mortgage Business Equipment Finance.
- LEASE FINANCE: Leasing is another popular form of Business Finance. The financier purchases and owns the but lends you use of the equipment for a fixed term during which you will be required to periodical lease payments. At the end of the finance term, you will have the option to buy the equipment for a calculated residual value.. Find more about Lease Finance for Business.
- HIRE PURCHASE: To simplify Hire Purchase – your finance is based on the lender purchasing the car or equipment and then hiring the equipment to you over and agreed term at the end of which you take complete ownership of the equipment. You can finance the entire purchase price of the equipment, or opt for contributing an initial deposit payment. A balloon payment can also be included in the finance agreement. Having that option to take full ownership of the car or equipment at the conclusion of the finance agreement means that your payments contribute to building equity in the purchased goods.. Find more about Hire Purchase.
BENEFITS OF ASSET PURCHASE
- Tax is reduced by claiming interest charges and depreciation.
- Fixed Payments for the term of the agreement allow for more accurate budgeting and protect you against interest rate fluctuations.
- Payments can be structured to suit your operation’s cash flow.
- Your business retains its cash reserves for use in unexpected events or to earn income through investment or other business activity.
- You can build Equity in your equipment.
- Upon making the final payment at the end of the term, you become the outright owner of the equipment.
- You can elect to make a balloon payment at the end of the period.
- In most cases a deposit is not required, however should you wish to make one you will benefit from either lower repayments, a shorter term or reduced interest charges.
- Asset Purchase does not restrict existing lines of bank credit.
- GST applies to your purchase price only and you can therefore claim a “Tax Input Credit”.