There are a range of finance options when it comes to asset & equipment finance, which makes it all the more important to speak to a specialist in this area:
This arrangement is the most straightforward of all lending options. A financial organisation will lend the client the necessary money to purchase the desired piece of equipment (new/used). This type of loan can be either secured (usually against the asset) or unsecured (incurring a higher interest rate).
A finance lease requires the financier to purchase the equipment and subsequently lease it to the business. Both individuals (personal use) and businesses (business use) can use this method. Repayments are made by the business in fixed amounts and regular intervals.
This form of finance is targeted towards businesses, where the financier buys the equipment and rents it to the business. Once the rental period is over, the business has the option to purchase the asset, continue renting it or upgrade to another piece of equipment.
Predominantly used for company vehicles, a novated lease is when an employee salary sacrifices the appropriate asset repayments. The employer is then obligated to fund the financier through a novated deed related to the employee’s wage. The employee is solely responsible for the vehicle (even upon resignation/termination).
A chattel mortgage is when a financial organisation advances the funds for the piece of equipment, and holds a mortgage over the asset (using it as security). The business becomes the owner from the moment the asset is purchased. There are a number of terms and conditions that apply.