Fixed charges are only available in England and Wales. It is when a lender will secure their loan against a specified item. With the advent of leasing and hire purchase, fixed charges are now less common. In days gone by the lender would have offered the loan or overdraft facility to allow the company to buy the item and the lender would have taken a fixed charge over that item. Now with hire purchase and leasing there are more cost effective ways to acquire particular items. Fixed charges are sometimes taken by lenders within Debentures where a particular asset has a strong value.

If you secured your loan through fixed charge you would not be able to modify or sell that piece of equipment without the approval of the finance company.

When is it used?
Fixed charge is used when businesses need a particular piece of equipment and don't have any traditional security. The piece of equipment acts as security against the loan and the fixed charge details the lenders interests in it. However it may be that hire purchase of leasing would be a better option.

Advantages:

Disadvantages:

Key UK providers:

• All High Street Banks and Building Societies
• Specialist Lenders