Asset finance

It’s still possible to get personal asset finance, and one of the most popular options is for buying cars. Compared to traditional forms of finance, the benefits of asset finance can include avoiding depreciation, freeing up capital, improving cash flow and reducing upfront costs.

Understanding common asset finance options

• Commercial hire purchase: Obtain the business equipment or car you need through a hire purchase loan, where you pay hire charges over a fixed period. As soon as all your hire purchase payments are complete, ownership of the asset is transferred to you.
• Chattel mortgage: Commonly used by business owners and operators for car and equipment finance. With a chattel mortgage, the asset is owned by you from the outset and the loan agreement is secured by the asset.
• Finance lease: Finance leases are flexible leases for businesses wanting the option to buy at the end of the lease or hand back the asset.
• Novated lease: A novated lease is one of the easiest and most cost-effective ways to buy and own a car. This way, the financier owns the asset, while you and your employer sign a novation agreement to share the responsibilities of the loan.

Other things to consider: Balloon payments

• What? You choose to pay a larger sum of the loan value at the end of the loan term. The sum you pay is usually based on a fixed percentage of the total loan value.
• Why? Reduce your repayments when you first start paying off the loan. Consider how this will affect the amount of interest you pay over the life of the loan and the total amount that is left to pay at the end of your monthly repayment term. The remaining sum will need to be paid in full in one lump sum.
• How do I know if this is right for me? We can help you understand whether this approach suits your needs and run through the considerations and benefits in more detail.