How to buy a car under asset finance

In certain situations, it may be possible to finance your vehicle using what is called “asset finance” approaches.

Here we will explain how Forza Finance might be able to assist you in finding car asset finance.

What is asset finance?

Asset finance is a form of funding typically associated with a company as a legal entity.

It is used when the company concerned is seeking to purchase a capital item and add it to their accounting books as an asset. Examples of such might include plant, equipment or a vehicle. They would all be acquired in the name of the company, rather than somebody purchasing the same thing as an individual (e.g. the company’s owner or a director). 

Principles of asset finance

Asset finance can be useful to a company in any of several different ways.

For example:

  • as the vehicle or other item being purchased is held in the company’s name rather than the name of a director or other company officer, in certain circumstances that may provide additional legal distance between an individual and his or her debts plus the debts of a separate legal entity – i.e. the company;
  • it will be the company’s financial criteria that will be considered in terms of eligibility rather than those of an individual.  Note that there may be some exceptions to this in cases where the car asset finance provider requires what are called “directors’ guarantees” to support the loan application;
  • there may, in some cases, be some accounting and even residual taxation advantages to securing a vehicle as a company-owned asset rather than your own individual property.  This area typically requires the advice of a qualified accountant to be sure that it is beneficial in a given situation;
  • as the asset is typically held in the company’s name and the funding is secured against the asset itself, it may reduce the need for additional collateral to support the lending request.

Various approaches to asset finance

There are several different ways that asset financing can be sent up by a provider.

These might typically include:

  • Hire Purchase (HP);
  • various forms of leasing;
  • standard commercial loans (in this context, meaning loans in the name of the company for commercial purposes).

Purchasing individually or as a company asset?

If you are considering car asset finance as a method of securing your vehicle, the product you eventually select might vary considerably depending upon the unique individual circumstances of your company.  Assessing what is suitable for you in a given situation usually requires advice from your accountant and input from a specialist provider of asset finance such as ourselves.

A significant consideration will be how the procurement of the vehicle using asset finance may shape your company’s overall asset and liability position.  In many cases, there may be significant advantages to considering this sort of solution, but in some others, it may be preferable to consider alternative approaches, perhaps based upon securing the car in your own name as an individual.

Why not contact us to discover more about this potentially very attractive way of securing a vehicle or other asset in your company’s name?