Asset Finance- An Overview of a Financial Status
The Asset Finance Division basically belongs to the equipment finance which caters to the requirements of the infrastructure and mining industry and also enjoys a dominant leadership position in this segment. A specialized method of providing structured working capital and term loans that are secured by accounts receivable, inventory, machinery and real estate. Basically for the start-up companies, this kind of funding is very helpful and advantageous. A fine example of asset-based finance would be purchase order financing. A company which has spread its credit limits with the help of vendors and finally reached its lending capacity at the bank. Firstly, the asset based lenders finance the whole purchasing of raw materials and then they try for the purchasing orders being assigned to the lenders. Once all the orders are filled payment is being given to the lender and then in the final step lender deducts its cost and fees and gives back the balance to the company. There are some disadvantages in this type of funding, one of them is the high interest typically charged which can be as high as prime plus 10 percent. Another type of asset finance is — Intangible Asset Finance. Intangible Asset Finance is the branch of finance that deals with intangible assets such as patents and reputation. These types of assets are generally concerned with the interdependence of value, risk and time. Another term related to financial assets is asset-backed security. The value and income payments of asset-backed security are derived from and collateralized by a specified pool of underlying assets. Not only this, a special purpose vehicle is also being created to handle the securitization of asset backed securities. There are many other categories related to the term asset finance which are- 1. Vehicle & Asset Finance 2.Leasing & Asset Finance 3.Corporate & Asset Finance
*These days well established companies offer a wide range of vehicle loans according to the customer’s needs, both commercial and personal. Such companies finance the purchase of tractors, utility vehicles, cars, three wheelers, commercial vehicles and construction equipment. *Some of the leasing and asset finance solutions are- a)They will capitalize on your leading practices b)Might incorporate business performance management into your operating model. c)They allow you to select and implement a new asset finance system. *A fine example in this category is Macquarie Bank which includes the following branches- Macquarie Aviation Finance, Macquarie Equipment Leasing Fund, Macquarie Lending etc.