Finance Options
At Lumos Business Finance, we offer finance to businesses to assist the acquisition of vehicles and equipment our clients need to launch and grow.
Hire Purchase (HP)
A Hire Purchase (HP) is a finance agreement that allows businesses to purchase vehicles and equipment by paying in instalments over a fixed term. The main feature of an HP agreement is that you become the legal owner of the asset when all the repayments have been made. Under an HP agreement, typically you will pay an initial deposit at the beginning of the contract (usually the VAT where applicable), followed by monthly instalments that cover the remaining cost of the vehicle or asset.
Finance Lease
A Finance Lease differs from a Hire Purchase as the customer is paying for the use of the asset, rather than paying to take ownership at the end of the finance term. The customer makes an initial rental payment, followed by a fixed term of rentals. The VAT element of the purchase is spread across the rentals rather than paid in advance, lowering the initial upfront deposit amount. At the end of the agreement a customer can do one of two things:
a. Sell the asset to a third party on behalf of the funder and receive the larger share of the sales proceeds, or
b. Extend their use of the asset by entering a secondary rental period and paying one annual peppercorn rental, which is often equivalent to one monthly rental. Notice periods to exit a secondary rental period may apply.
Sale and HP / Sale and Lease Back
If you need to buy a vehicle or equipment quickly, it can be helpful to pay the supplier using your own funds and then refinance the equipment thereafter using a Sale & HP Back or Sale & Lease Back facility. A helpful product to get you moving quickly, releasing cash back to you within 90 days of payment to the supplier.
Refinance / Equity Release
Refinancing (capital release) is a quick way to free up the value in assets already owned within the business allowing you to use the value elsewhere within the company. This could be for business expansion, as part of the restructuring of existing facilities, for further capital purchases, or simply to ease cashflow. It doesn’t matter whether the assets still have finance on them or you own the assets outright – refinance can be used in both scenarios.