Purchase new equipment and vehicles with asset finance from First Oak
Asset finance is an extremely tax efficient way of making large capital purchases
Almost every business will come to the point where new large ticket assets such as vehicles, equipment or machinery are required in order to grow and to deliver a more efficient operation. This leads to increased profits which can be used to re-invest and expand.
If these assets are purchased using capital taken from your business, the effect on cash flow can hold other areas of your business back and be detrimental. So careful consideration is required and interest charges and fees should be compared to potential upsides and tax benefits.
Unlike cash you can benefit from tax relief on both capital & interest, on what is usually a depreciating asset that can often be quickly superseded by later technology.
Asset finance products from First Oak Capital allow firms to make large purchases which otherwise may be out of reach and can be offset against tax on profits.
There are two main types of asset finance which are leasing and hire purchase. Hire purchase allows you to take ownership of the asset once all the payments have been made and leasing is a form of rental.
The next question is whether to lease or buy assets?
TAKING ADVANTAGE OF ASSET FINANCE
Borrow £10k – £500k
Fixed Rates from 7.9%
Receive funds in as little as 48Hrs
Improve cashflow
Use for almost any reason
Leasing will give you access to new or used equipment by renting it for a fixed period, without ever owning the asset. At the end of the agreement you will be able to return the asset or continue to lease if required.
There are different types of lease which include equipment lease, finance lease and operating lease. Your First Oak Capital advisor will be happy to assist you with deciding which one is most suitable for your purchase and circumstances in conjunction with advice from your accountant.
VAT is spread over the term of the agreement instead of being paid in one lump at the beginning and can also be reclaimed. The remainder of the monthly payment can be offset against tax and is a fixed cost that can be reliably budgeted for over the lifetime of the agreement.
The finance provider does own the asset until it is paid for in full and if you fail to keep up the payments, the lender may repossess the asset.
Hire Purchase agreements are an alternative to leasing and provide you with the ability to take ownership of the asset once all the payments have been made. If you want ownership and feel the asset has a potentially long and useful life span then this may suit you better. The asset will appear on your company balance sheet and depreciation can be offset against tax. VAT does need to be paid up front however this can be often claimed back within a few months.
Ultimately you will need to decide on which method is best suited for your business and this may depend on how much cash you have available and what your accountant recommends. You can also rely on us to explain the pros and cons of each so that you can make an informed decision about what is right for you.
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Business Finance From £25K to £1M. We strive to offer simple, pain free business finance to UK companies and provide the highest levels of personal service.
FAQs
An asset is anything that has intrinsic value like vehicles, machinery, buildings or equipment. Generally assets are used in the day to day running of your company.
You can apply for anything between £1000 and £10m depending on the lender and any limits that they may set on your business.
Typically between 6 months and 7 years
With a lease the finance company purchases the asset and then “rents” it back to you. In this case you will only pay VAT on top of the rental payments effectively spreading the VAT over the term of the loan. With hire purchase, you would need to pay the VAT up front and reclaim at the end of your vat quarter. You would then be just financing the pre-vat price less any deposit you choose to contribute.
The leasing of equipment as well as the hire purchase of equipment are common examples of asset finance. As a result of the sort of asset finance you choose, the responsibility for maintaining and repairing the asset, (repairs, insurance, etc.) may be yours or the finance company’s depending on the form you choose.
Equipment leasing involves you hiring business critical assets from a vendor or finance company and then returning it to them at the end of the agreement. You can effectively rent anything from a laptop to a commercial vehicle.
Equipment leasing involves you hiring business critical assets from a vendor or finance company and then returning it to them at the end of the agreement. You can effectively rent anything from a laptop to a commercial vehicle.
Yes, asset finance is a type of loan that is secured by the assets of the business, such as plant, machinery, equipment, etc. A bank loan is exclusively based on how well you are currently doing financially and how much cash you have available. This type of financing is typically either a lease agreement of some kind or a hire purchase agreement, and your lender will also take into account any positive effects that the new purchase is expected to have on the profitability of your business.
To take out a leasing agreement, you will usually need to be VAT registered. This is in your interest as most of the time you will be able to claim this back.
To get started with your application, click here.
Yes you are responsible for damage to the asset whilst in your possession and having insurance is always required. If you are returning the asset at the end of the agreement, fair wair and tear is expected and an inspection to assess condition may be needed.
Have Asset Finance Questions?
Please give our friendly team a call on 0800 066 3677 if you’d like more information on how we can help you arrange asset finance for your next purchase.
We’re open Monday – Friday, 9.00-5pm. Or if you’re ready to get started, click the button below.
