Asset finance

Arranging asset finance through Luna Finance allows you to plan for the future with fixed payments. We can help you to manage your cash flow more effectively and efficiently, whilst having access to the assets needed to grow your business.

What is asset finance?

In order for businesses to grow, they often need to invest in new assets or equipment. Asset finance is a lending option for organisations which require new equipment but don’t immediately have the funds. This type of finance can help businesses to purchase essential assets such as equipment, machinery, vehicles, and technology. Typically this finance method involves paying for the use of the asset in regular instalments over an agreed time period.

You might not be in a position to purchase the asset now but can if you can make payments over monthly instalments. In order to help, asset finance with Luna Finance gives you the equipment you need to grow your business right away.

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Advantages include:

  • Quick access to necessary business equipment.
  • Minimise cash flow issues that can arise from making large purchases.
  • Payments can be fixed which is useful for budgeting and managing your cash flow.

Why consider asset finance with Luna Finance?

Asset finance can help fund almost any type of asset, allowing you to obtain equipment in an affordable, risk-free manner. At Luna Finance we understand the need for you to grow your business in a way that suits your financial capability. We know that not having access to certain assets can put the future of your company at risk or cause uncertainty.

Types of asset finance

Finance lease

A finance lease is where you rent an asset for the duration of its economic lifetime. The lender will own the asset and you will pay its full value in monthly instalments – with interest added – in order to use it. Unlike other finance options, with a finance lease, it’s unlikely you will need to put down a deposit.

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Benefits of a finance lease

  • Flexibility – Contract terms are tailored to suit your business requirements
  • High-value assets – That you otherwise might not be able to afford
  • Fixed payments – Allows you to better manage your cash flow and budgets
  • Low/no upfront costs – Preserve business capital for other purposes
  • Tax efficient – Reclaim VAT on rentals

Contract hire

With contract hire, you will only pay the depreciation value of the asset, not the full amount. However, at the end of the contract, the asset should be worth the value agreed upon when the contract was taken out. This means there might be additional maintenance costs to consider.

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Benefits of contract hire

  • Full use of a high-value asset – Remove the burden of ownership
  • Improve cash-flow – Spread the costs over time
  • Stay ahead – Swap asset for a new option when the contract ends
  • No administration – This is handled by the leasing company as legal owners of the asset

Hire purchase (HP)

Also referred to as ‘HP’. The key difference with HP finance compared to leasing options is at the end of the agreement your business will have full ownership of the asset. You will pay for the asset in monthly instalments with added interest and will usually be required to put down a 10-20% deposit.

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Benefits of hire purchase (HP)

  • Flexible repayment time – Able to spread the cost over the assets lifetime
  • Post-contract options – Either purchase the asset when the contract is complete or return to the lender
  • High-value asset – Full use of products that your business might not be able to afford if paying in full
  • Tailored finance – Agreement is designed to your business requirements, cash flow and budgets
  • Tax advantages – Offset interest and charges against business profits

Lease purchase

This is a hire purchase agreement but an amount of capital (residual value) is offset until the contract ends. This reduces the monthly payments but you must settle the lump sum at the end of the term.

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Benefits of lease purchase

  • Lower monthly payments – As the residual value reduces the amount you pay each month
  • Flexible repayments – Able to choose a repayment plan that suits your business
  • High-value asset – Access to high-quality assets that may be too expensive otherwise
  • Frees up finance – More money remaining to use towards other business needs
  • Ownership – Once the balloon payment (residual value) has been paid, the asset is then yours

Operating lease

An operating lease is similar to a finance lease but the contract will run out sooner. This is because the lender expects the asset to have a resale value at the end of the agreement – known as the residual value.

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Benefits of an operating lease

  • Cost effective – Don’t need to use up your business capital to acquire essential assets
  • Reduced commitment – Full use of an asset without needing to purchase outright
  • Low risk finance – Maintenance and finance benefits stays with the leasing company
  • Flexibility – Agreement is tailored to your business needs, cash flow and budgets
  • Tax advantages – For VAT registered companies