Asset finance options for business vehicles or equipment

Businesses going through periods of growth may need new equipment or vehicles to support this. Understanding the three most popular asset finance options will help you choose the right one for your business if you need funding.

Asset Finance overview

Asset financing typically involves fixed monthly repayments for the term of a loan in return for use and potential ownership (finance option dependent) of an asset. Asset finance may help you:

  • Run, grow or expand your business to meet changing demands
  • Purchase equipment to help your business run more efficiently
  • Ease the burden of purchasing new equipment
  • Manage unexpected costs, like needing to replace or maintain existing assets

The most popular asset finance options are an equipment loan, hire purchase and finance lease. Make sure you understand the features and conditions of each to work out which could best suit you and your business.

Other considerations

For both an equipment loan and hire purchase, you may also want to consider:

  • Structuring a larger payment at the end of the term - commonly known as a residual or balloon payment - as this may reduce the monthly repayments by taking a portion of your loan and paying it as a lump sum at the end of the loan term
  • Calculating the total cost involved such as the upfront deposit, application and document fees, monthly repayment amount and account fees, and term of the loan
  • Speak to an accountant or financial advisor to understand which option may best suit your financial situation - you may also be able to claim GST depending on your finance arrangement

Get in touch

If you need help to figure out what type of business lending and level of funding you need, talk with your accountant or get in touch with us and talk to someone from our specialist team. An ASB Business Banking Specialist can explain each option in more detail and help you understand which may best suit your needs.

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