The veterinarian’s guide to equipment finance9th December 2015
Veterinary practices depend on a wide range of equipment, so ways to finance those assets are essential. Asset finance can be used for everything from large x-ray processors to smaller tools like stethoscopes and thermometers. The amount of loan products available within asset finance is overwhelming, but we’ve narrowed it down to the two that are most applicable to the veterinary sector: leases and hire purchase.
- Hire purchase is a way for businesses to purchase physical assets such as examination tables, scales, or microscopes without paying for them outright. It has the advantage of working as an installment plan – once the business has finished making the payments, they’ll own the asset permanently.
- The process will begin with a deposit, which will be a percentage of the total value of the equipment. Once the business pays the deposit they will have immediate access to the equipment, and they’ll continue by making monthly payments that include interest.
- As with other forms of asset finance, hire purchase comes with built-in security, so approval rates are usually high – but just like every loan, this depends on the business’ situation. If they have poor credit, they might have a harder time being approved.
- Unlike hire purchase, the monthly payments a business makes for a lease don’t add up to the total cost of the asset, so they won’t own it once the terms are up – they’ll only have the option to continue leasing it or return it.
- Because the asset acts as its own security, approval rates for leases are generally high as well – but like any other loan this depends on the business’ history and credit rating.
- There are two main forms of leases: finance leases and operating leases. The difference between the two lies in the terms – the terms of a finance lease generally last as long as the equipment will be useful (a period determined by the lender) while an operating lease usually goes on for less than the asset’s useful life. This means that operating leases can be a better option if a business only needs the equipment temporarily.
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