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“Graham Lee from Asset Finance has the highest form of personal & professional service and advice. Always willing to take up a challenge and exceed expectations, Graham has provided exceptional service for all my business & personal needs. He will get to know your business to best service your exact needs.”


Marco Siciliano – Universal Bread & Roll Bakery

“Our long term relationship with both Jeff & Graham has seen us work through many difficult and varied financial challenges. From home purchases, business refinances through to equipment finance, we have always thought they have put in extra effort and gone the extra mile to find the best solutions. Congratulations to Jeff & Graham and the team at Asset Finance. “


Tony Vaughan – John A Gordon Refrigeration Pty Ltd

“We have been dealing with Andrew Somerton and the team at Corporate finance for over 15 years now and find the level of service unparalleled in the Equipment Finance industry. We are able to refer business to the Corporate Finance team safe in the knowledge that their service is merely an extension of our own.”


James Edgar – MOR Accountants

The Importance Of Asset Finance To Businesses


Nowadays, there are many places where business owners can get asset finance for their business. The source of funding is not just limited to banks and other lending companies; dealerships, suppliers and authorized distributors have also started offering this credit facility due to its ever increasing popularity.

Asset Finance Defined

Asset finance is basically any credit facility that is advanced to a borrower for the purchase of equipment, automobiles or any other type of movable asset. Borrowers do not need to provide any type of security since the asset itself acts as collateral. Usually, the borrower is required to identify the asset, get a quote as well as an invoice. The next step is to fill out a loan application form providing their personal details as well as the type and value of asset he or she wishes to purchase. The invoice is usually attached to the application form. The lender will run a credit check on the applicant to determine their suitability for the loan. If the applicant has a good credit score and stable income, the application will be approved. The lender will write a check to the vendor and take possession of the title to that asset. On the other hand, the borrower will take possession of the asset and use it for personal or commercial purposes. The loan is repaid using monthly installments over a period of several months up to a few years. Once the loan is fully settled, the bank will transfer the title to the client.

Benefits of Asset Finance to Businesses

Asset financing is beneficial to businesses because entrepreneurs do not have to use any of their existing finances and assets to acquire a new one. While saving to buy a new asset is another option, it usually takes a lot of time to accumulate funds to buy a costly asset that is important in the operations of the business. With asset financing, the lender buys the asset on behalf of the business. The piece of machinery, equipment or automobile can then be used profitably in the operations of the business as monthly payments are made. In essence, the assets pays the loan and buys itself out. There is very risk involved in this type of financing because it’s only the reputation of the borrower that is on the line. If the borrower defaults, the asset is repossessed by the lender and auctioned off to pay the outstanding debt. By getting financing for capital assets, businesses can dedicate their funds to expansion, value addition, marketing and exploration of new markets among other important applications. This type of finance has a number of benefits over traditional business loans, which usually have numerous requirements. For one, the borrower cannot misuse funds because the money is forwarded directly to the vendor for the purchase of the asset. With traditional loans, the borrower can misappropriate the funds once the money is credited into their bank account.

This type of financing is commonly used to aid in the acquisition of medical equipment, agricultural machinery and equipment, manufacturing equipment, locomotives for public transport, commercial vehicles, IT equipment and printing presses among other types of assets.

Important Points to Note

As mentioned earlier, the lender carries a lot of risk; only the reputation of the borrower is at stake. For this reason, the interest rate on this type of financing is usually a little bit higher than mortgage loans. To minimize the risk, the lender requires the borrower to purchase a comprehensive insurance cover to protect the asset. This policy must be valid for the whole term of the loan. Machines usually depreciate over time due to wear and tear. This depreciation is normally considered when calculating interest rate and monthly payments as well as the term of the credit facility. The monthly payments must be high enough to compensate for the depreciation because the appraised value of the asset must always be higher than the outstanding balance of the loan.

While this type of financing comes with higher interest rates, this does not mean that borrowers should pay anything the lender quotes. Some shopping around needs to be done to identify the most affordable lenders.