Construction Asset Finance
Construction Asset Finance is a convenient, flexible way of helping you buy the essential plant and machinery you need to carry out successful construction projects.
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What is Construction Asset Finance?
Construction asset finance lets you buy any construction related assets, plant and machinery you need without having to tie up your cash.
You can also use this type of asset finance to raise money on the assets you already own.
There are different types of construction asset finance such as hire purchase where you will own the asset at the end of the loan term. There are also options where you have exclusive access to the asset for just the period of time you need it.
You might want to buy or have access to various types of construction equipment including plant, earth moving equipment, excavators, diggers, trucks, loaders and crushers. All of these can be very expensive and if using cash would take up large amounts of a businesses resources.
Having finance lets you buy the vital equipment you need without having to use too much of your own cash reserves.
How Does Construction Asset Finance Work?
A deposit is put down at the start of the agreement and the balance of the asset is spread over the agreed term with your business paying monthly installments.
With fixed payments it allows you to easily budget each month for the cost of the machine or equipment you are buying.
There are a few types of construction asset finance to consider, some you end up being the asset owner at the end and some let you give the asset back.
To keep the payments as low as possible, some arrangements will have a balloon payment to be made at the end of the agreement. There are also finance options which will allow you to refinance the balloon over a longer period, if you need that flexibility at the end of the agreement.
Construction Asset Hire Purchase
Hire purchase is the most traditional form of asset financing, where you own the equipment at the end of the term.
You will pay an initial deposit with the balance of the asset cost to be spread over a term of, normally, up to 60 months.
The loan would only be secured on the asset, not your business, keeping your other assets outside the agreement.
Construction Asset Lease Purchase
With a lease purchase, just as with an HP, you will become the owner once the final payment has been made.
The main difference is there will be a balloon payment payable at the end of the agreement. This lets you keep the monthly payments lower but you are responsible for that final payment.
If needs be, you can look at refinancing the balloon payment, to make it more affordable.
Other Construction Asset Lease Options
There are two other types of lease available: Operating leases and Finance leases. With this sort of construction asset finance you won’t end up owning the asset at the end.
With an operating lease you have exclusive right to use the asset for the duration of that lease agreement. So you only pay for it for the time you will need it, the finance company will then have it back to potentially release to a new user.
A finance lease will cover the whole cost of the asset which is then sold at the end of the agreement. You will get back most of the sale proceeds, normally up to 95% of the amount it sells for. You could also keep using the asset for longer at a peppercorn rate, on a secondary rental. It’s important to note you will not be the asset owner at any point.
What Are the Benefits of Construction Asset Finance?
Rather than using your cash to buy the asset you need, finance can offer you some advantages:
- Flexible Payments – Spread the cost of buying your new equipment over 5 years
- Fixed Payments – Easily budget knowing the monthly cost of your loan
- Buy higher spec – Not having to pay outright means businesses can afford higher spec equipment than their cash allows
Whether you want to lease or own we have a large panel of lenders, keen to provide finance for all types of construction asset.
For a free, no obligation conversation call Tim on 01492 233 808.
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