Plant Machinery
Plant Machinery

Engineering Finance

Engineering projects can be complex and complicated, and they often require input from a variety of specialists. Obtaining business finance can be difficult and time-consuming, adding unwanted hassle to your project planning. ACF Direct helps engineering businesses secure a wide range of asset finance methods – discover more about the available options below.

Hire Purchase

This is a long-established, extremely popular method of asset finance for engineering businesses. You will be required to pay a certain percentage of the asset upfront in the form of a deposit, followed by regular monthly repayments. The finance organisation will then provide the remaining balance and purchase the equipment in their name, allowing you to fully utilise it. Once the final repayment is made, the asset is legally yours.

Some of the benefits of a hire purchase include the fact that depreciation of the asset and any interest added to the repayments may be exempt from tax. Your business may also be able to reclaim any VAT included.

Contract Hire

Entering into a contract hire agreement relieves the pressure of buying, maintaining, repairing and selling engineering assets. You are required to pay an agreed monthly hire cost, and at the end of the contract you simply hand the asset back to the owner.

There are no depreciation costs or risks involved in a contract hire as you do not legally own the asset. You may be able to recover the VAT on your payments, and the equipment appears as an “off balance sheet”.

Finance Lease

A finance lease provides your engineering business with all the benefits of ownership, minus any unwanted hassle. Formal ownership of the asset is retained by the finance provider; however, you are given full access to usage of the equipment. You will be required to pay an agreed monthly lease rental over a period of time, with the repayments eventually covering the total sum of the asset.

At the end of the contract, you can choose one of the following options. Firstly, you can re-lease at a mutually agreed rental value. Secondly, you can sell the asset, typically retaining around 95% of the total sum. Finally, you can simply return the equipment to the finance provider.

Operating Lease

This finance method shares some of its features with a finance lease, with the key difference being that the monthly repayments will not cover the full sum of the asset. You will gain full, exclusive access to the equipment and be required to make a monthly lease rental.

One of the key benefits of an operating lease is that the anticipated residual value is covered by the finance organisation and therefore reflected in a reduction of rent. It may also be treated as an “off balance sheet”. Once the agreement is over, you simply hand the asset back to the owner.

ACF Direct provides finance solutions that are readily available, straightforward and accessible. Please get in touch with us today – we can discuss a wide range of options and help you secure funding for your engineering project.