Asset Finance - FAQs
Vehicle and Asset Finance Facility
Q1: What is Asset Finance?
A: Asset Finance is a Credit Facility that allows customers to acquire moveable assets and repay in installment over a specified period of time.
Q2: What Assets can be financed under Vehicle and Asset Finance?
A: We finance any moveable asset that is easily identifiable, that is, it has a serial number or registration number
Examples of these include:
- Motor vehicles, saloon, pickup trucks
- Lorries and light commercial vehicles
- Construction equipment
- Earthmoving equipment
- Industrial and factory equipment
- Agricultural equipment
- Cranes Hoists and related lifting equipment
- Computers & IT equipment
- Medical equipment
Q3: Are there items not financed under Vehicle and Asset Finance facility?
- Fabrication materials
- Equipment consumables
- Installation labour costs
Q4: I have a piece of land that I purchased a few years ago. I would like to put up some a building on the land. Can CBA finance me to put up the building?
A: Yes the bank can assist you. However, under Asset Finance, we only deal with movable assets and buildings are not. Our Corporate or Business banking units, will be excited to assist you achieve this goal.
Q5: For how long can I finance the different assets [Repayment Period]?
- New Vehicles – Up to 5 years
- Used Vehicles – 3 to 4 years [Minimum age 7 Years]
- Construction equipment, up to 5 years
- Earthmoving equipment up to 5 years
- Industrial and Factory equipment up to 5 years
- Agricultural equipment 2 to 4 years
- Cranes Hoists and related lifting equipment up to 5 years
- Computer equipment 2 to 3 years
- Medical equipment up to 3 years
- School buses – 15 terms [5 years]
*The periods may vary slightly for different business lines
Q6: Will the bank finance me the full cost of the vehicle or I need to pay a certain percentage of the cost?
A: The bank does not finance the full value or cost of the asset. This means that the bank and the borrower both contribute to the purchase of the asset at different % to the purchase price.
We finance assets at different levels as here below:
- New Commercial, Private Vehicles and Long Haulage Trucks - 80% to 90%
- New Machinery and Equipment – 70 to 90%
- Used Commercial and Private Vehicles – 70% to 80%
- New Tractor – 60% to 70%
- Construction equipment 70 to 90%
- Earthmoving equipment 70 to 90%
- Industrial and Factory equipment 70 to 90%
- Agricultural equipment 60 to 70%
- Cranes Hoists and related lifting equipment 70 to 90%
- computer equipment 50 to 90%
*The level of financing may vary slightly for different business lines
Q7: What security or collateral do I require for the finance that the bank will grant me?
A: The asset we finance and the business cash flows are the primary security for the facility.
Q8: Do you finance any type of vehicle or machinery that I require?
A: This will depend on your business and the type of asset you require. We will also review the type of asset applied for, its age, make, quality, reliability and durability.
Q9: What age of vehicles do you finance?
A: We finance vehicles that are 7 years old. Therefore depending on the date of purchase the year of manufacture could be different.
Q10: Do you require a valuation report?
A: Yes, we do request for a valuation report for 2nd hand Assets, to determine the actual state of the asset and secondly, its market value.
Q11: What is a valuation, who does it and do I require one?
A: We have a panel of valuer’s who are authorized to value assets being financed by the bank. This would be availed to you on request.
Q12: What do you use to determine how much you can finance me between the valuation price and the selling price?
A: We use the lower of the two.
Q13: Is there a maximum amount I can borrow of the bank?
- We look at the business in question, the asset you are require, the revenue the asset will generate and your current revenues to determine your ability to repay the facility. Therefore we do not have a maximum amount save for the maximum limit each bank is allowed to lend to one single customer and this changes from time to time.
- On the other hand we have a minimum loan amount of Kes 500,000.00
Q14: I have been in business for the last 10 years and I have never seen the need to register the business, can you still lend to me?
A: The business does not need to be registered for us to lend to you. However going forward you should consider having the same registered for ease of borrowing.
Q15: Some banks insist that one must be an accountholder to get an asset finance facility. Is that the case with CBA?
A: With CBA we can finance you the purchase of an asset based on your bank statements from another bank. However once we grant you the facility, we will require you to open an account with CBA and use the account for part of your business banking.
Q16: What type of Insurance do you require take on the assets being financed?
A: All assets financed by the bank need to be insured under a comprehensive cover for vehicles and an all risk cover for machinery. Where the total insurance premium cost is high, the bank is willing to finance the same over a maximum period of 10 months
Q17: Do you require vehicle tracking devices to be installed in financed vehicles?
A: Yes, we require all vehicles to be fitted with a tracking device from our panel of vendors. This should be for the full tenor of the loan.
Q18: In the event of a company borrowing, do you require the directors sign anything?
A: Yes, as the company’s authorized signatory, we require the director to sign a personal director’s guarantee and indemnity, letter of offer, Vehicle and Asset Finance agreement besides signing other post approval documentation.