What Is It?
What Are The Different Types?
Asset finance is a type of finance used by businesses to get assets and equipment they need to grow. Typically it involves a regular payment for use of the asset over an agreed period of time, therefore avoiding the need to pay the full cost of the asset upfront.
The most common types are:
What Are The Pros?
Easier to obtain than traditional bank loans.
Fixed payments make budgeting and cash flow simple to manage.
Most agreements have fixed interest rates.
Failure to pay only results in the loss of assets, nothing more.
What Are The Cons?
There is the risk of losing important assets required for running a business.
Value of the assets which a loan is secured against can vary, with the possibility of low valuations.
Not as effective for securing long term funding.