Virtus Finance’s Frequently Asked Questions

Welcome to the Virtus Finance FAQ page. Here you will find answers to the most common questions about our asset finance services. If you have additional questions, please do not hesitate to contact us.

Jump to your questions:

What is Asset Finance?

Asset finance is a type of funding that allows businesses to obtain the necessary equipment, vehicles, or technology without paying the full cost upfront. Instead, businesses can spread the cost over a set period through regular payments. This approach helps businesses preserve cash flow, access the latest assets, and maintain financial flexibility.

How Does Asset Finance Work?

Asset finance involves an agreement between a business and a lender. The lender purchases the asset on behalf of the business, which then makes regular payments to the lender over an agreed term. Depending on the type of asset finance, the business may own the asset at the end of the term (hire purchase) or return it and upgrade to a newer model (leasing).

Here are the common steps involved in Asset Finance:

Assessment: The business identifies the asset it needs and contacts an asset finance provider like Virtus Finance.

Proposal: The finance provider evaluates the business’s financial situation and proposes a tailored financing solution.

Agreement: The business and the finance provider agree on the terms, including payment schedule, equipment and the type of asset finance.

Acquisition: The finance provider purchases the asset and leases it to the business.

Payments: The business makes regular payments over the agreed term.

Conclusion: At the end of the term, the business either owns the asset (in the case of hire purchase) or decides to return or upgrade it (in the case of leasing).

What is a Lease Agreement?

A lease agreement is a legal contract where one party (the lessor) allows another party (the lessee) to use their property for a specific period in exchange for payment. It outlines the terms under which the lessee can use the property and guarantees the lessor regular payments for a specified period. Lease agreements are commonly used for acquiring equipment, vehicles, and other assets without purchasing them outright.

What Can Be Leased?

Most tangible and intangible assets can be leased. This includes, but is not limited to:

• Machinery and equipment
• Vehicles
• Office furniture and IT equipment
• Software and technology
• Commercial real estate

Leasing allows businesses to use essential assets without the full cost of ownership, providing flexibility and preserving working capital.

Can I Lease as a New Start?

Yes! At Virtus Finance, we understand the unique challenges faced by new businesses. We offer funding for new start-ups through our various funding channels, subject to necessary checks and approvals. Our goal is to support new businesses in accessing the equipment and resources they need to grow and succeed.

Is Leasing Right for Me?

• Leasing can be highly beneficial for many businesses. Some of the key advantages include:
• Improved cash flow management
• Access to the latest technology and equipment
• Tax efficiency
• Flexible payment terms
• Preservation of working capital
• Risk mitigation related to asset obsolescence

For more detailed information, please refer to our blog post on the benefits of leasing. Alternatively, get in touch with our team, and we can provide personalised advice based on your specific business needs.

What is a Hire Purchase Agreement?

A hire purchase agreement is a type of borrowing where you hire goods (commonly a vehicle or equipment) and pay an agreed amount in instalments. You do not own the goods until you have made all the payments. This type of agreement allows businesses to acquire assets while spreading the cost over time. However, if you fall behind with payments, the lender may repossess the goods.

What are the Benefits of a Hire Purchase Agreement?

Hire purchase agreements offer several benefits, including:

• Ownership of the asset after the final payment
• Fixed interest rates and repayment terms
• Improved budget management with predictable monthly payments
• Potential tax benefits as the interest on hire purchase agreements can often be deducted as a business expense.

How Does Asset Finance Improve Cash Flow?

Asset finance improves cash flow by allowing businesses to spread the cost of expensive equipment or assets over time. Instead of a large upfront payment, you make regular instalments, which align with your revenue generation. This approach helps maintain liquidity and ensures that capital is available for other operational expenses or investment opportunities.

What are the Tax Advantages of Asset Finance?

In the UK, payments made under an asset finance agreement can often be tax-deductible as a business expense. This can reduce your overall tax liability, providing significant tax advantages. Additionally, certain types of asset finance, such as leasing, may allow you to offset payments against taxable profits.

How Can Virtus Finance Tailor Payment Terms to My Needs?

At Virtus Finance, we understand that every business has unique financial circumstances. We offer flexible payment terms tailored to your specific needs, including:

• Adjustable repayment periods
• Customisable payment frequencies (monthly, quarterly, etc.)
• Options to structure payments to match seasonal cash flow variations

Our goal is to provide financing solutions that align with your budget and cash flow requirements.

What is the Risk Mitigation Aspect of Asset Finance?

With certain asset finance agreements, such as leasing, the risk of asset obsolescence or depreciation is borne by the lender. This means that your business is not left with outdated or depreciating assets. At the end of the lease term, you have the option to upgrade to newer technology or equipment, ensuring your business remains competitive and efficient.

How Can I Apply for Asset Finance with Virtus Finance?

Applying for asset finance with Virtus Finance is straightforward. Simply contact us to discuss your requirements, and our team of experts will guide you through the application process. We will assess your needs, provide tailored solutions, and help you choose the best financing option for your business.

Contact Us

If you have any further questions or need personalised advice, please don’t hesitate to contact us. Our team at Virtus Finance is here to support your business and help you achieve your financial goals.

Ready to explore asset finance options for your business? Contact Virtus Finance today and let us help you empower your potential.