Lighten the load with heavy plant machineryPublished on 9th June 2017 - Last update on 8th January 2019
Many sectors of the British business community depend upon the mass availability of essential assets to run their businesses. Very often, acquiring the ideal equipment and tools for your business can be extremely expensive, removing large chunks of your capital and causing irreparable harm to your business’ finances. This is especially true for developing SME warehouses, storage depots, construction firms and so on that all rely on the use of heavy plant machinery. Yet, rather than surrender your business to calamity, there is another way.
Regardless of whether your business needs forklift trucks, diggers or even a fleet of dozers, the alternative finance industry can help you break through your dilemma unscathed. Using the services and expertise of the finance extraordinaires at Rangewell, your business can gain access to an extensive array of finance solutions, including Asset Finance!
Asset Finance: Your heavy plant machinery saviour
Asset Finance is an exceedingly popular method of business finance for many SME business owners, and for good reason. It is perfectly suited and adapted to help your business acquire all the assets that it requires to function at peak efficiency. Without the existence of heavy plant machinery, fulfilling key contracts would take much longer, earning your business a negative reputation. But Asset Finance allows you to avoid that and maximises productivity, making it an invaluable resource for a wide range of sectors.
How can Asset Finance help?
As well as granting your business access to essential pieces of heavy plant machinery, it can do so much more. The key benefit of Asset Finance is the ability to spread out the overall cost of an asset over a period of up to 7 years, making acquisitions far more affordable and less painful. With the average cost for a single piece of heavy machinery usually amounting to quite a hefty sum, ordering more than one could be more than what your business can handle alone. Plus, depending on the finance product and the asset you choose, you will be able to recover any VAT outlay as well as enjoy tax benefits. Just be sure to discuss this with your business accountant before entering any agreements.
How does Asset Finance work?
Asset Finance is an extremely popular method of acquiring the right pieces of heavy machinery equipment and making it affordable. It allows you to either purchase, lease or even unlock cash sealed away in your existing assets. To grant you these options, Asset Finance stands as a specialised collection of finance products that include Leasing Agreements, Hire Purchase solutions, Asset Refinance and much more!
Leasing Agreements are a popular alternative to asset ownership and enable you to have the use of the equipment rather than outright ownership. Typically lasting between 1-5 years, although 7 years can be accommodated subject to the value of equipment, leases allow your business to have the use of heavy plant machinery for a set period or term. However, there are two types of lease on the market and it’s imperative that you understand them in order to get the most appropriate product that caters to your business’ precise needs.
- Operating: leases enable you to use heavy plant machinery for a portion of its working life, however, you will be responsible for its maintenance and upkeep unless you have also arranged a separate maintenance contract with the supplier. This finance solution works by the lender purchasing the machinery in question and offering a fixed monthly payment for an agreed term. Payment costs take into account both the usage of the machine during the contracted periods as well as the future predicted value at the end of the contract. At end of the term, subject to terms and conditions, generally, you’re free to either extend the lease, hand back the asset or upgrade to a higher quality model.
- Finance: leases, on the other hand, cover the majority or entire working life of the concerned machinery. You will also be required to accept certain responsibilities regarding maintenance, repairs, registration, administration and so on. Again, you are leasing the machinery in exchange for a fixed monthly repayment, which includes both capital and interest. Once the agreement has elapsed you are free to return, extend the agreement or possibly purchase the asset from the lessor subject, of course, to their terms and conditions.
Hire Purchase is extremely popular among business owners seeking heavy plant machinery as this option grants you the ability to eventually gain ownership. How this product works is by the lender purchasing the machinery from a supplier on your behalf and letting you have access to its use in exchange for fixed monthly repayments, which include a combination of capital and interest. However, before you can access the machinery you must first pay the lender an ‘initial deposit’ or lump sum. This covers full VAT and is usually more or less 10% of the asset’s total cost, although this is negotiable depending on the circumstance. Once the deposit has been paid you’ll be required to pay fixed monthly repayments that are calculated using the length of the term, money costs and the sum borrowed. At the end of the term, ownership of the asset is transferred to you providing all repayments have been made.
Asset Refinance allows you to acquire a lump sum on the back of your existing and unencumbered business assets. If you already own plant machinery, for example, you can use them to acquire a lump sum to help purchase the latest model. If the lender agrees, they purchase the asset in question from your business but will allow you to retain its use. Technically a type of loan agreement, terms can last up to 5 years during which you’ll be required to pay a fixed monthly payment which is a combination of capital and interest. As a secured form of business finance, should you fall behind on your payments the lender can seize the machinery in order to recover their costs. At the end of the agreement and once the finance product has been repaid, ownership is returned to you.
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