Asset finance is where finance is taken out secured against an asset, such as a vehicle, or some business equipment or machinery. It can be taken out by individuals or companies, below is some key information around some of the most common types of asset finance we can assist you with.
Hire Purchase (HP) is simply a hire agreement which offers a straightforward way of spreading the cost of your vehicle or company asset, with the benefit of ownership at the end of the agreement.
At the start of the agreement, you simply decide on an initial deposit, typically 5% upwards of the purchasing price, the length of term of your agreement, usually between 12–84 months. Then throughout the term you pay equal monthly instalments with a fixed rate of interest until the remainder of the balance is repaid.
At the end of your agreement once you have made your final monthly repayment including a nominal Option To Purchase Fee, the title of the asset will be transferred into your name.
Lease Purchase also known as Hire Purchase with a Balloon, is like a standard Hire Purchase (HP) finance plan. However, your monthly repayments are reduced by deferring a proportion of your balance, a balloon payment, to the end of your finance agreement.
Lease Purchase is available to business customers and private individuals. It helps you spread the cost of your asset with lower monthly payments to suit your budget, with the option to purchase at the end of the agreement.
At the start of the agreement you simply decide an initial deposit, typically between 5%–50% of the purchasing price and choose your agreement term usually between 12–84 months.
Your equal monthly payments including interest payable, and a final agreed deferred balloon payment are then calculated.
At the end of the agreement you then have a number of options.
Pay the deferred final balloon payment, plus an Option To Purchase Fee, the title of the asset will then be transferred into your name.
Part-exchange the asset subject to settlement of your existing credit agreement.
Refinance the final balloon payment.
Sell the vehicle or asset privately, once the balloon payment has been paid.
Personal Contract Hire
Personal Contract Hire (PCH) is a straightforward hire agreement for private individuals. With this finance plan the option of hiring a new vehicle rather than ultimately owning it means there is no need to worry about depreciation or selling, you just simply pay the fixed monthly rental over the term of the agreement.
At the start of an agreement, you simply choose an initial rental in advance, this keeps your monthly payments lower to suit your budget, your contract term usually between 18–60 months, and an agreed predicted annual mileage.
With a Contract Hire agreement, you can even choose to include your vehicle maintenance costs and service expenditure including brakes and tyres, reducing any of those unexpected costs.
At the end of your agreement, you simply return the vehicle with nothing further to pay, providing the vehicle has not exceeded the agreed annual mileage and is in good condition.
Why choose Personal Contract Hire?
- Low initial deposit
- Road Fund Licence included for the duration of your agreement.
- Fixed monthly rentals during the term for ease of budgeting
- No depreciation risk at the end of your agreement
- Optional service and maintenance package
- Flexibility to change your contract mileage during the agreement.
- Pay invoices upfront – Lots of businesses employ staff to chase their outstanding invoices. This facility allows up to 85% of their invoices to be paid upfront. Are you are in business and have companies that have 30 day, 60 day or longer terms before they pay it will be worth a conversation to see how we can help speed up the payment of your invoices.
Asset Finance is provided on a referral basis to our trusted Asset Finance partners.
If you proceed with a finance acceptance, we receive a commission from the broker. This is a fixed payment or percentage but will not impact the acceptance you receive.