This structure transforms a large capital expenditure into manageable operational costs, preserving liquidity for other strategic priorities. Ownership terms vary; in some structures, the business gains ownership at the end of the term, while in others, the financier retains this right.
Driving Productivity And Revenue Growth Through Strategic Asset Finance Solutions
These structures appeal to companies that intend to utilise the asset long-term without immediate capital outlay. The financier assesses the viability of the repayments and the residual value of the equipment at the term's end.
By leveraging future income or the asset itself as security, businesses can unlock immediate capacity without draining working capital. Chattel mortgage is similar, but the business owns the asset immediately, using it as security for the loan.
Driving Productivity And Revenue Growth Through Strategic Asset Finance Solutions
Capital leases, conversely, transfer significant risks and rewards of ownership to the lessee, often culminating in the purchase of the asset. This ownership aspect can offer accounting and tax advantages for certain enterprises.
More About What is asset finance
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