Looking to finance the purchase of business assets? Use this handy asset finance calculator to get an understanding of how much your loan might cost.
Page written by Ian Hawkins. Last reviewed on May 17, 2024. Next review due March 1, 2025.
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Asset finance is a form of lending you can use to buy business assets which are critical to the successful running of your company, such as machinery and vehicles. You can typically borrow as little as R10,000 and up to R10 million over periods as long as seven years, with interest rates starting from as low as 1.4%. The main types of asset finance are equipment leasing and hire purchase.Â
If your company is asset rich but cash poor, you could also consider using asset refinance which allows you to use existing equipment as collateral against a loan.
An asset finance loan is a type of loan used to purchase or lease business equipment, vehicles, or other assets. The amount of the loan is typically based on the value of the asset being financed, and the loan is secured by the asset itself.
To calculate an asset finance loan, the lender will typically consider several factors, including:
The value of the asset: The lender will assess the value of the asset being financed and may require an independent valuation to ensure that the loan amount is appropriate.
The loan term: The loan term is the length of time over which the loan will be repaid. The longer the loan term, the lower the monthly repayments, but the more interest will be paid over the life of the loan.
The interest rate: The interest rate on an asset finance loan will depend on several factors, including the lender’s assessment of the borrower’s creditworthiness, the value of the asset, and the loan term.
Any fees or charges: The lender may charge fees for arranging the loan or for early repayment.
Once these factors have been considered, the lender will calculate the total cost of the loan, including interest and any fees or charges, and divide this by the loan term to determine the monthly repayments.
It’s important to note that asset finance loans may be structured in several different ways, including lease agreements, hire purchase agreements, and asset-backed loans. The specific terms and conditions of the loan will depend on the type of financing chosen and the lender’s policies.
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