Assets add the mandatory values to the business and it can be managed only by the financing. Better choice of financing or leasing will you to the growth of the business. Assets included in the list of the company’s balance sheet can be inventory, real estate or anything that is required for the better performance. It takes sweat, tears and so many years for a company to reach the point where you can finance your assets. Unfortunately, to reach that point you need every kind of investment.
What is hire Purchase?
It is a financing solution appropriate for businesses desiring to purchase assets without giving the full value instantly. The customer is liable to pay initial deposits and the remainder of the balance along with interest is paid overtime. On completion, ownership of the asset transfers to the customer. Small businesses often rush in such decisions but they should always consider differences between different types of loans. It is a must to learn about some important factors before opting for any financial assistance through any method.
Common uses of Hire Purchase in Singapore
The use of Hire purchase is common among small businesses and industries where inventory or expensive equipment is a requirement. Manufacturing industries, engineering, and professional organizations will usually approach it. Well, in Singapore, there are many ways to hire purchase. Other than banks, there are leasing companies offering finances on easy and reliable terms.
However, the most common uses of hire purchase are:
- Engineering firms
- Professional organizations
- Plant Hire
- Press and printing
It can be used for smaller purposes like car, photocopiers and other small items, but this should be informed earlier.
Advantages of the Hire Purchase
Let’s see through the advantages before you go for the wrong decision.
- It permits any company to control and organize assets without a noteworthy drain on working capital.
- Fixed-rate funding makes costing easy as the renter has a clear sight of future outgoings.
- The flexibility of repayment structuring is available to allow for a seasonal business.
- It averts the risk of an asset’s value belittling quickly and offers flexibility to cross the threshold into a new contract at the end of the original lease’s fixed term.
- Financing asset grips can be more tax effective than other loans due to lease expenditures being booked as costs.
- High accessibility of financing for businesses due to the financing being secured with the leased asset and the asset being owned by the financing company.
- In certain circumstances, there is maintenance included within the terms of the agreement.
Moreover, Hire purchase has benefits as well as disadvantages. It is all about your financial requirements and emergency situation. You have to look up for the conditions that suit your business values and strategies. Equipment for any form is necessary especially if it is the source of your overall earnings. So, choose wisely and lookup for best hire purchase options in Singapore.