A loan is a simple way to acquire an asset – you borrow a lump sum from the lender, purchase the asset outright, and repay the loan in instalments over an agreed term. This gives you full ownership from day one while allowing you to spread the cost, so you avoid a large cash outlay up front and preserve liquidity for operational needs.
A loan is a simple way to acquire an asset – you borrow a lump sum from the lender, purchase the asset outright, and repay the loan in instalments over an agreed term. This gives you full ownership from day one while allowing you to spread the cost, so you avoid a large cash outlay up front and preserve liquidity for operational needs.
In accounting terms, the asset is recorded on your balance sheet and depreciated over time, while the loan appears as a liability. The interest element of your repayments is typically tax-deductible, and capital allowances can usually be claimed on the asset’s cost, offering further tax efficiency.
Owning the asset outright means you retain any residual value at the end of its useful life. This can make a loan attractive for assets that hold their value well or have long-term utility, although you also take on the full responsibility for maintenance and eventual resale.
