Equipment finance Adelaide

As the name suggests, Vehicle and Equipment Finance, also known as Asset Finance, is for the purpose of financing vehicles, equipment and other non-property assets. Asset Finance has been described as the financing of any asset that isn’t bolted down…. And some that are Typical assets funded under this type of finance include cars, trucks, buses and farm equipment. However, Asset Finance is also used to fund less common assets from large scale assets such as ships, planes and trains down to office furniture, IT systems and medical equipment.

Vehicle and Equipment Finance is generally a fixed interest rate loan, structured over the useful life of the asset it is funding (or less) and often has a balloon repayment no more than the estimated residual value of the asset at the facility expiry. Repayments can be structured on various timeframes including monthly, quarterly, semi-annually and annually. Vehicle and Equipment Finance will always be secured by the asset it is funding.

The four main types of Vehicle and Equipment Finance facilities are a Chattel Mortgage (aka an Equipment Loan), a Hire Purchase Agreement (aka “Offer to Hire” and “Rent to Own”), a Finance Lease (aka “Capital Lease”) and an Operating Lease. Each of these different facilities has different accounting, tax and residual value risks associated with them. It is best for borrowers to consult their accountant to determine which type of facility is most appropriate for their particular circumstances.