Different Types of Equipment Finance you can Get

When you hear about vehicle and equipment finance in Brisbane, you might think about getting money for vehicle and equipment. Actually, you are right! Equipment finance is a type of business financing where certain companies get a significant capital to purchase or lease equipment. 

Talking about equipment, it applies to office necessities like computers, desk, and servers as well as heavy equipment such as tractors, delivery trucks, and more. This equipment allows businesses to use these physical assets for their operations without paying up for the full up-front price. 

But before you apply for the equipment finance, you need to know the different types of finance available. Here is the list of some equipment finance that you can opt for:

Commercial hire purchase (CHP)

The lender agrees to purchase the property needed by the business in CHP or commercial hire purchase. Moreover, he/she will let the business hire the equipment for a fixed monthly repayment over a specific period of time. In this type of finance, throughout the contract term, the ownership belongs to the lender, even after the business is in possession of the property. 

After paying all the dues along with the interest rates, you can legally own the equipment. Further, this type of finance is great for businesses that account for GST payments, whether in the case or accrual basis and that is because you can claim for a tax deduction. It is also a good choice for businesses that are looking for a better cash flow.

Chattel mortgage

Generally in this finance, a borrower purchases a movable asset or property (chattel) by taking a loan from the lender. Here the movable asset or property serves as a security if the borrower fails to pay the loan. Although it is different from a typical mortgage, where the loan is taken against a fixed asset or property such as a home or a farm. 

Alike all mortgages, After all the purchases are done, the ownership of the property is transferred to the borrower in the chattel mortgage. While in secured loans, the borrower cannot legally own the purchased asset unless the loan is fully paid off. If you want to get chattel mortgage contact Brisbane Home Loan and their equipment finance brokers in Brisbane will help you with that. 

Equipment lease

When purchasing equipment becomes impractical, think about equipment lease. It is a great option for businesses that don’t require the equipment year-round. This is also beneficial for the operations where they require to upgrade equipment frequently. Moreover, the equipment will incur a huge capital investment and will also incur depreciation cost and can be difficult to resell as well.  Alike CHP, equipment lease works the same, but in this, you won’t be able to take the equipment home after the lease contracts get complete as had taken the equipment on rent for a certain period of time. An equipment lease is favourable because it makes better cash flow and also gets to take away a huge chunk on your capital investment.

Resource Link: https://brisbanehomeloans.wordpress.com/2021/04/21/different-types-of-equipment-finance-you-can-get/