Equipment Refinance

Equipment refinance helps you to release cash back into your business using assets that you own or partly own. Yet despite the useful benefits, it’s an underused financial solution. Everything your business needs to know about equipment refinance from Origin Finance UK business finance brokers.

Equipment refinancing

Many different industries have huge amounts of capital tied up in machinery or vehicles, especially manufacturing, construction. These assets can have significant value and present business owners with the option of bringing working capital back into their business.

Equipment refinancing has become an increasingly popular option for businesses looking to optimise their financial strategies in 2024. As experts in business finance, Origin Finance understands the importance of staying informed about the latest trends in equipment refinancing.

To help those considering equipment refinance (also known as asset refinance), we’ve answered some commonly asked questions to explain how it works and what can be refinanced.

What equipment can you refinance?

Equipment refinance can only be used on equipment and vehicles, including plant and machinery.

You might think of vehicles as your typical lorries, cars, trucks, buses, and vans, but they also include specialist vehicles such as tractors, forklift trucks, cement mixers, etc.

Plant includes but is not limited to cranes, piling machines, excavators, and heavy machinery used in civil engineering and construction.

If you would like to know if your asset can be refinance, Origin are here to help and create a tailored solution for your finance requirement.

Can I use equipment refinance on something that’s already on finance?

Yes. It doesn’t matter if your vehicles, plant or machinery are currently on finance (provided that your asset has enough equity). In fact, refinancing can be a strategic way of consolidating your costs. As part of the refinancing process, we’d settle the existing finance. Where possible, we’d then try to reduce your monthly outgoings to help you manage your cash flow.

How much will I receive through equipment refinance?

It depends on the lender and your specific circumstances, but generally lenders will release between 75% – 80% of the current value of your vehicle, plant or machinery.

What are the benefits of equipment refinance?

There are several benefits of using equipment refinance, some of which we’ve mentioned above, but to summarise:

  • Working capital is released back into your businesses. Your debt is secured against the vehicle, plant or machinery that you’re refinancing.
  • It’s an easy way of boosting your cash flow as funds will be deposited direct into your account.
  • You get to keep your equipment and you can keep using it as you normally would.You can use equipment finance as a way of reducing interest or securing more competitive repayment terms on existing finance agreements.You don’t often need any additional security, such as a personal guarantee, as you would for some other finance products.
  • Monthly payments are fixed, making them manageable as they’re not affected by interest rate rises.

Are there any restrictions on what can be refinanced?

Generally, we’re able to refinance most vehicles or plant and machinery, as long as it’s based in the UK. We also have a £10,000 minimum on what we can refinance.

Otherwise – it’s very likely that we’ll be able to help you with refinance. You can even refinance old equipment and vehicles. Age limits for refinance vary across different assets, Origin will be able to tell you which of your assets can be refinanced.

Business refinance

One key advantage of equipment refinancing is the ability to update or upgrade essential machinery without a significant upfront cost. This can help businesses stay competitive in rapidly evolving industries where technological advancements are crucial.

Refinance business loan

When considering business asset refinancing, it’s essential to work with experienced finance brokers like Origin Finance. Our team can help you navigate the complexities of refinancing, ensuring you secure the most favourable terms and conditions for your specific needs.

Refinance equipment loan

As we move further into 2024, equipment refinance continues to be a valuable tool for businesses looking to streamline their finances and invest in their future.

By partnering with Origin Finance, you can make informed decisions about your business refinance options and set your company up for long-term success.

How can Origin Finance help?

We’re specialists in equipment refinance. This expertise can pay dividends, as sometimes, something as simple as helping you secure competitive interest rates can have a big impact on your daily cash flow.

We’ll provide a free no obligation valuation of your vehicles or plant and machinery so you know exactly how much you can raise from your assets. We’ll also help you put your application together quickly and efficiently, maximising your chances of securing the funding you need.

Get in touch to find out more about how we can help.

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As a business owner or even just a consumer, I bet you’ve heard the term refinance before? But have you truly understood what it was or included? Well as a business owner refinancing can have many advantages, not only can you refinance existing business loans you can also refinance other business debt such as car finances. But what is refinancing? This is where you revise or replace your existing credit agreement, which is normally a business loan, business car finance etc. and seek to make it better and more favourable for the business, such as having a positive change to their interest rate, their repayment term, you could even refinance all your business debt payments into one which makes managing your cash flow a lot easier. As soon as a refinance has been approved the new contract will take place of the original contract.

Refinancing doesn’t always mean you need to get a loan from a bank, nowadays businesses are refinancing using their assets. A common type of this is when you can get a Loan secured against business machinery, vehicles or high-value items and as long as you pay your loan back on time (or earlier) and in full your assets will still remain yours. There are many advantages of this, such as being able to raise capital within the business without needing any business debentures, personal or business guarantees but still having the assets working within the company.

When deciding if you want to refinance or not, there are key things to know, such as the different refinancing options. The type of loan the borrower will choose will depend on why they are borrowing. Some of the refinancing options include:

  • Cash-out refinancing – Cash-out Refinancing is very common when an asset in the business that is being used as collateral has increased in value. The cash-out process includes withdrawing the value or equity in the asset which then in exchange will give you a higher loan amount. Not only does this option give the borrower access to cash instantly without selling the asset, but it also still allows them to have ownership of the asset.
  • Rate and term refinancing – This is the most common type of refinancing; this is when the original loan is paid and replaced with a new loan agreement that requires lower interest payments. Something to consider with this option is if you’re close to your end of term finance agreement, taking out a new agreement with a lower interest rate might cost more due to the duration of the new loan.
  • Refinancing a car – Very similar to the rate to term refinancing, Car refinancing is where you replace existing car finance with another car finance. This could be to get lower interest payments; it could also be that you wish to upgrade or trade-in your current car, getting a new loan may also give you an additional loan amount you can put towards a new car which could make the payments lower, but you could also upgrade your car to something more expensive as you have a larger loan amount.
  • Cash in refinancing – A cash-in refinance will allow the borrower to pay a portion of the loan for a lower loan to value ratio or to simply just get smaller loan repayments each month. For example, if you take out a loan and the repayments are three hundred pounds per month, you could also give an upfront amount of money to make the monthly payments only two hundred pounds a month.
  • PCP refinance – Personal contract purchases are typically used for car loans (This type of refinancing can be used on other assets also such as expensive machinery). When a PCP is taken out and then the loan comes to an end there are many options to choose from. Since PCP finance splits the overall cost of the car and interest across a series of fixed monthly payments and the end of the term you can either have an optional final payment (which is also known as a balloon payment) this gives you lower monthly payments and allows you to be flexible with how you proceed at the end of the contract. You can either pay the optional final payment as stated above or you can choose to hand the car back with nothing to pay as long as you have stuck to the pre-agreed mileage limit and there is no damage on the car beyond the general wear and tear.
  • Consolidation refinance – sometimes a consolidation refinance can be the best and most effective way to refinance. A consolidation refinance can be used when the borrower obtains a single loan at a rate that is lower than their current average interest rates of all their credit products (this could be loans, cars, credit cards) this type of refinancing will require the borrower to apply for the new loan at the lower interest rate and then pay off the existing debt with the new loan. Not only does this give you a lower interest rate on average but it also gives you just one monthly payment. This can make cash flow easier, also if you wanted to pay the loan off earlier you are just paying additional payments into one loan as opposed to a few different loans.

There are many advantages of refinancing but the main ones are below:

  • You can get a lower monthly payment and interest rate. Saving you money
  • You can convert an adjustable interest rate to a fixed interest rate, gaining predictability and savings.
  • You can acquire an influx of cash for a pressing financial need.
  • You can set a shorter loan term, allowing you to save money on total interest paid.

From all the information above it is clear that most businesses will refinance to save themselves money or to get initial cash to build on their capital. Speak to Origin Finance to find out what is available to your business.