Buying equipment outright turns a productive asset into a hole in the current account. Asset finance spreads the cost over the period the asset actually earns, and the security is the asset rather than a charge over property or a personal guarantee against your home.

The structure decides what you end up owning. Hire purchase is a route to ownership: you pay a deposit, then instalments, and the asset is yours at the end. A lease is a route to use: payments are for the use of it, and at the end you return, extend or sometimes buy. Which is right turns on whether the asset holds value and whether you want it when the term ends.

Term is set by the asset, not by you. Heavy plant with a long working life supports a longer agreement than IT equipment, which a lender will want repaid well before it is obsolete. Ask for a term the asset does not support and the answer is no, or a much larger deposit.

Hire purchase against lease, on your numbers

The comparison is not the monthly payment. It is the total cost, what you own at the end, and how each is treated in your accounts, which is a conversation to have with your accountant before signing rather than after.

New, used and private sale

Most lenders fund new and dealer supplied used equipment readily. A private sale or an auction purchase is a shorter list and usually needs an inspection, so it is worth establishing before you bid.

Refinancing what you already own

Equipment bought outright can often be refinanced to release the cash back into the business. It is an often overlooked route to working capital, because the security already exists.

Balloons and what happens at the end

A balloon payment lowers the monthly cost and leaves a sum due at the end. That is fine where the asset holds value and a problem where it does not, so the exit is agreed at the outset.

Which lenders play here

A deep independent market alongside the bank owned funders, and manufacturer backed schemes that are often the cheapest option on new equipment from a main dealer. Appetite varies by asset class more than by borrower. We arrange asset finance for limited companies and for agreements outside the consumer credit rules. A sole trader or a partnership of two or three partners borrowing up to £25,000 is regulated, and we introduce those cases to an authorised firm.

Working life

What sets the term

The asset

What secures it

HP / lease

The two structures

Indicative, and not an offer. What a lender will actually do depends on the business, its accounts and the lender's credit assessment.

What to have ready

Bring these and we can tell you where you stand.

Each one is something a lender will ask for. Having it early is the difference between a fast answer and a slow one.

✓What you are buying, from whom, and the invoice or quotation

✓New or used, and its age and hours or mileage if used

✓Whether you want to own it at the end

✓Filed accounts, plus current management figures

✓Your deposit and where it is coming from

✓Any equipment you already own outright, which may be refinanceable

Invoice finance

Cash released against the sales ledger rather than against an asset.

Unsecured business loans

Underwritten on trading and covenant, with no charge over property.

Common questions

The questions this product raises.

What is the difference between hire purchase and leasing?

Hire purchase ends in ownership: a deposit, then instalments, and the asset is yours once the last payment is made. A lease pays for the use of the asset, and at the end you hand it back, extend, or sometimes buy it. Choose on whether the asset holds its value and whether you want it once the term ends.

Can I refinance equipment I already own?

Often, yes. Equipment bought outright can be refinanced to put the cash back into the business, with the asset itself as the security. It suits plant and vehicles that hold their value, and it is often overlooked as a source of working capital.

Can I finance used equipment or an auction purchase?

Used equipment from a dealer is widely funded. A private sale or an auction purchase has a shorter list of lenders and usually needs an inspection, so agree the finance before you bid rather than after.

How long can an asset finance agreement run?

As long as the asset keeps earning, not longer. Heavy plant with a long working life supports a longer term than IT equipment, which a lender wants repaid well before it is obsolete. A balloon payment lowers the monthly cost, but only makes sense where the asset will still be worth that sum at the end.

Bring us the detail.

Send what you have. We will tell you what is fundable and what needs work before anyone approaches a lender.

Tell us what you are buying

Specialist property finance for developers who want the numbers to survive underwriting.

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Fundingwise Limited is not authorised or regulated by the Financial Conduct Authority, and arranges unregulated finance only. That means lending secured against commercial property, or against residential property that is not, and will not be, occupied by the borrower or an immediate family member as a main residence. We do not advise on or arrange regulated mortgage contracts or regulated bridging loans. Because this finance is unregulated, FCA conduct rules and access to the Financial Ombudsman Service do not apply. Fundingwise Limited is registered in England and Wales, company number 13750788.

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Asset finance

Bring these and we can tell you where you stand.

Related in this pillar.

The questions this product raises.

Bring us the detail.