Asset Finance Benefits
The pros and cons of asset or equipment finance 
The process of using asset or equipment financing usually is beneficial to a firm but there are some important points to keep in mind. As with all financial agreements you should make sure that you are well informed before signing a contract. There are some drawbacks to using asset finance but depending on your firm's situation the benefits of using Asset Finance should be greater.
Pros of Asset Finance
- Stronger cash flow – Smaller, frequent lease payments free up your cash flow level. This allows your company to adapt more easily to different business conditions.
- Lack of debt – Using Asset Finance means that you can keep your firm's borrowing options open. An operating lease is viewed as an expense and not a debt so it does not have an effect on your credit rating.
- Tax benefits – Lease payments are classed as expenses, this means that untaxed money can be used.
- Clear Budget Management – Paying a fixed monthly sum over an agreed period of time makes for more simple budget management.
- Lease specific bonuses – In some cases a lease can be arranged to include specific benefits, these could include equipment servicing or the ability to make variable regular payments.
Cons of Asset Finance
- Fixed contracts – Asset Finance contracts are normally arranged over a fixed term. In some cases it is not possible to end the contract early and if it is then it will usually be a costly option.
- Greater cost – The total value of repayments on an Asset Finance agreement are greater than the cost of purchasing the asset with a single payment. It is useful to remember the tax benefits when comparing the two different costs.
- Fixed interest – In general most Asset Finance contracts have a fixed rate of interest. This can seem costly if interest rates drop sharply. However interest rates could increase suddenly so this could be a benefit in certain cases.
- Extra guarantees – The lessor of an asset might ask for extra security depending on the firm's financial standing. This could have an effect on your company's credit rating.
If you want more options we can offer you structured funding options from a broad range of asset based finance products such as refinancing, leasing, no matter which industry you belong to.
You can also read our articles to know about important aspects of asset financing.
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We do not provide any financial advice of any nature and we only operate as introducers between UK businesses and regulated finance companies and only for amounts in excess of £25,000.