There are three families of finance products available from FLA members
When commercial organisations, whether sole trader, large corporation or public sector, wish to invest in tangible assets, they usually need an affordable, secure means of finance. Asset Finance is the third most common source of finance for businesses, after bank overdrafts and loans.
The two main forms of Asset Finance are Hire Purchase and Leasing
Hire Purchase (HP)
Hire Purchase is a well established method of financing for companies that wish eventually to take ownership of business assets.
The finance company buys the asset on behalf of the customer, who then pays an initial deposit. The remaining balance, plus interest, is then paid over an agreed period. During this period, ownership rests with the finance company, who is effectively hiring use of the asset to the customer.
Once the final payment is made, ownership transfers to the customer.
Under a commercial agreement, the leasing company (known as the lessor) buys and owns the asset.
The customer (or lessee) then hires use of the asset, paying rental over a fixed period. At the end of the contract, the customer usually has a choice of extending the lease, buying the asset or simply returning it.