Asset finance (hire purchase and leasing)
Spread the cost of equipment, vehicles or machinery over time through hire purchase or leasing, instead of paying for it all up front.
- Secured on assets
How it works
The finance provider buys the asset and you pay for it in instalments. The main types are:
- Hire purchase: you own the asset once all payments are made. Until then the provider owns it, and you maintain it.
- Finance lease: you rent the asset for most of its life, paying off its cost plus interest. You insure and maintain it. At the end you can keep renting, return it, or sell it on the provider's behalf.
- Operating lease: you rent the asset for a set period, and the provider maintains it. You may be able to upgrade during the term.
- Contract hire: often used for vehicle fleets. The provider sources and maintains the vehicles.
- Business contract purchase (balloon payment): lower monthly payments, with a large final payment to own the asset. It usually costs more overall.
Upsides and downsides
Upsides
- Get the equipment now without a large upfront payment
- Keeps cash free for other needs
- The asset itself is the main security
- Operating leases and contract hire can include maintenance and upgrades
Downsides
- Costs more in total than paying cash
- Under hire purchase you do not own the asset until the last payment
- You usually cannot sell the asset during the term unless the agreement allows early settlement
Risks
- The provider can take back the asset if you miss payments
- Being locked into payments for equipment you no longer need
What it costs
- How it is priced
- Regular payments covering the asset's cost plus interest, plus fees
- Costs that are easy to miss
- Fees and interest on top of the asset's price
- A balloon payment at the end of some agreements
- Maintenance and insurance costs under hire purchase and finance leases
Based on the cost of the asset you are buying or leasing.
Have a quote? True cost of a loan: work out the APR-equivalent and total cost
Does it fit?
Could fit when
- You need equipment, vehicles or machinery that will earn money over several years
- You would rather keep cash for working capital
Unlikely to fit when
- The asset will be out of date long before the agreement ends
- You can buy it outright without straining your cash flow
Who can use it
- Business types: Sole trader, Partnership, Private limited company, LLP, Public limited company, Community interest company, Co-operative or community benefit society, Charity
- Needs sales (revenue)
- The provider assesses your business and the asset itself
Am I ready?
What a provider is likely to ask for. Tick what you have. Your ticks stay in this browser and nothing is stored. Checklist for all bank and mainstream debt
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- Quote for the asset
- Accounts
- Bank statements
Regulation and protections
Depends on the provider and the agreement. If the provider is FCA-authorised, many smaller businesses can take an unresolved complaint to the Financial Ombudsman Service.
Types of provider: Bank-owned asset finance companies; Independent asset finance providers; Manufacturer and dealer finance.
Also consider
Sources
- British Business Bank: What is asset finance? · checked 7 October 2026
- Financial Ombudsman Service (small business): Who we can help · checked 7 October 2026