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What is Asset Finance and How Does it Work in New Zealand?

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When starting or expanding a business, planning and cash flow management should be top of your list. Setting up a business involves a load of costs that can drain your reserves. You might need to buy a vehicle or a large piece of equipment and you think, how on earth am I going to fund this? Well, that’s where asset finance, also known as equipment finance, comes in. With so much to think about in your business, terms like asset finance and knowing how it works, and how it may benefit you, can seem a bit tricky. Today, we’re going to simplify the banking jargon around asset finance and see how these types of loans can help you start or scale your business, without breaking the bank.

Asset Finance NZ: The Basics

First things first, what exactly is asset finance? In simple terms, asset finance is a lending solution that allows businesses to acquire all sorts of assets without having to make a large upfront payment. A business asset could be anything from a tradies van to large pieces of machinery or even office equipment like computers, printers, and the like. Basically, it’s just a loan to fund general items that help you run your business.

The Benefits of Asset Finance

But why does asset finance benefit my business, and why should I use this as an option instead of just buying it outright? Well, there’s quite a few reasons:

  • Preservation of Capital: Capital is key to keeping a business open and running smoothly. Instead of paying upfront for your tools of the trade, you can use asset finance and spread the cost over time, in manageable instalments. This hugely improves your day-to-day cash flow and makes it much easier for you to keep your doors open.
  • Flexible Terms: Generally, you can tailor your asset finance to suit your needs. There’s a range of different options out there. These could include things like leases, hire purchase agreements, or equipment loans, depending on what suits you best. Part of any business set up should involve speaking to your financial adviser, to ensure you get the very best product for your business. 
  • Tax Benefits: Who doesn’t want a tax benefit? In New Zealand, you may be eligible for tax deductions and GST refunds, which can give a great amount of financial relief. This does vary from business to business, so make sure to do your research about what deductions you may be eligible for. 
  • Helps you stay competitive: Keeping your equipment and technology up-to-date is vital for staying competitive in today’s business world. Asset finance ensures you can always have the latest tools and machinery at your disposal.

How Asset Finance Works in New Zealand

Now, let’s talk about how asset finance works its magic. The process typically involves the following steps:

  • Choose Your Asset: Select the equipment, vehicle, or technology you need for your business operations.
  • Negotiate Terms: Once you’ve made your selection, you’ll work with a finance provider to determine the terms of the financing agreement. This includes things like the repayment period and interest rates.
  • Application and Approval: You’ll need to submit an application, and upon approval, the finance provider will purchase the asset on your behalf.
  • Repayments: You’ll make regular repayments, which can be structured in a way that suits your cash flow. These payments cover both the principal amount and the interest.
  • Ownership Options: Depending on the type of finance agreement, you’ll have options at the end of the term. You might own the asset outright, return it, or upgrade to a newer model.

Asset finance in New Zealand is all about making your life easier. It lets you access the assets you need to grow your business without crippling your finances.

In conclusion, asset finance NZ and equipment finance NZ are valuable tools for businesses looking to thrive in the competitive landscape. These solutions can help you acquire the assets you need to operate efficiently, stay competitive, and preserve your working capital. If you’re a New Zealand business owner, it’s a smart move to explore asset finance options to propel your enterprise to new heights.

So, if you’re ready to rev up your business’s financial engine and get the assets you need, asset finance is your ticket to success. Say goodbye to upfront costs and hello to a more accessible, sustainable way to grow your business in New Zealand.

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