Asset finance is the most tax efficient way of acquiring business equipment. It is possible to offset your monthly repayment to reduce your tax liability. Other methods of equipment acquisition, such as outright purchase, do not carry the same level of tax benefit.
In addition to the considerable tax savings, it is widely considered prudent to use asset finance when acquiring new equipment rather than tie up your own valuable working capital.
So by using asset finance:
- you reduce the level of tax you pay
- you preserve working capital.
When you consider these major benefits it is hard to find an argument not to use asset finance.
The process of securing asset finance is far easier and quicker than approaching your bank for a commercial loan or overdraft extension. A bank will take far longer to consider your application and may seek onerous security – a charge over property or debenture of business assets. With asset finance none of this is necessary: the equipment financed is the primary security. And of course if you use an asset finance provider for asset finance, you keep your banking facilities unaffected. So if you do need an overdraft extension, for example, your bank will most likely assist.
And on the practical level: if you intend to use a piece of equipment for five years, why would you pay for it on day 1 in full rather than – with asset finance – over the length of time you plan to use it?