Refinance Existing AssetsPublished on 9th November 2016 2016-11-09T22:06:13+00:00 - Last update on 22nd November 2019 2019-11-22T12:01:04+00:00
As your business develops and grows, so too do your challenges and requirements. Your business may have previously needed extra equipment (or something else entirely) and one of the ways you may have acquired equipment, tools and heavy machinery may have been through hire purchase.
Hire purchase allows you to acquire the equipment you need and, eventually, acquire ownership of the asset. To begin, you’ll need to pay an initial lump sum in the region of 10% of the asset’s total worth before commencing with monthly repayments for the remaining sum, plus interest.
For example, if a business owner sought to acquire a £20,000 asset through Hire Purchase, they’d be required to pay an initial £2,000 lump sum. From here on, they’d be required to gradually repay the remaining £18,000 via a monthly repayment scheme.
Refinancing an asset
A lender may decide to refinance the asset for a sum in the region of 70% asset’s total worth. Note, that the asset’s worth is subject to depreciation, depending on how much usage it has seen and for how long.
After the lender pays the asset provider the remaining sum owed, ownership of the asset passes on to them. Subsequently, they’ll lend to you a sum, possibly in the region of 70% the asset’s worth after depreciation, which you’ll repay via monthly payments plus interest.
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