Businesses – whether enterprises by individuals or corporate outfits – often reach a point where they need to acquire movable assets.
They could need a vehicle (whatever the class), office machines (such as heavy-duty photocopiers), or even industrial equipment.
To many entrepreneurs and even farmers, that may remain an unattained dream for some time because they don’t have the money to buy the item of their desire in all cash.
A farmer may feel a tractor would make a difference on the farm. An information technology (IT) firm may need tens of computers to maximise the economies of scale.
A fast-moving consumer goods business may want a new fleet of vehicles to distribute its products fast. An industrialist may want to buy a certain equipment but lacks the cash.
All these firms and individuals have the option of going for asset finance.
It is now increasingly possible to realise the dream of owning an array of moveable assets without having to pay the entire cost upfront. Asset-based finance solutions are now widely available in the country to finance the purchase of vehicles or capital equipment.
Some assets with excellent re-sale value attract financing of up to 95 per cent repayable over a five-year period.
Aggressive marketing of asset financing by banks and promotions by dealers are making it relatively easier to own any of these assets and reap immense social and economic benefits.
One no longer needs to have a lump sum amount to secure the object of desire; a deposit and arrangements with a financier is all one needs.
Owning any of these assets is a dream shared by millions of people across the country.
In the past, many people thought that most of these assets were way out of their reach and opted to save money over long periods and buy used ones.
Banks are willing to give out loans and members of the public are snapping up the offers.
Motor vehicle dealers have also made arrangements with financiers for their customers to get the funds they need for a purchase. Some dealers have gone a step further and established in-house leasing divisions to support their vehicle distribution function.
Buyers are enjoying the benefits of an increasingly vibrant asset financing industry.
Asset finance is an attractive option because it is relatively easy, quick and straightforward for the buyer.
The financier assesses the level of risk involved in lending the potential buyer.
Depending on how they view the customer’s financial standing, they will ask him/her to finance the purchase up to a certain percentage.
A contract is then drawn up between the buyer and the financier stipulating what each party must do as part of their bargain.
After paying the initial deposit and the financier agrees to pay the balance, the buyer takes home the vehicle and starts using it to be able to pay the financier the agreed amount per month.
The financier pays the difference to the dealer and awaits monthly payments from the buyer.
Given the popularity of this mode of acquiring brand new assets, those who borrow money from financiers are happy; they are able to repay the loans within set periods and ultimately own the assets.
Experts say the future of this kind of financing in Kenya has a lot of potential.
Co-operative Bank of Kenya, one of the major players in this arena, has partnered with schemes like Toyota Kenya and Isuzu to facilitate businesspeople in acquiring vehicles for their businesses.
To learn more about Co-operative Bank’s asset finance solutions, visit: