Guide
How to switch business bank account
What the Current Account Switch Service covers, how long it takes and what to prepare.
Read guideCompare asset finance
Fund equipment, machinery and vehicles without a large upfront cash outlay — hire purchase and leasing compared
Compare asset financeReady to compare asset finance?
Run a full market comparison before you commit. It takes about five minutes and there's no obligation to apply.
What is asset finance?
Asset finance is a way of funding the purchase or use of business equipment, machinery, vehicles or technology by spreading the cost over time, rather than paying the full price upfront from cash reserves.
The asset itself usually secures the finance, meaning the lender can repossess it if repayments aren't kept up, which typically makes asset finance cheaper and more accessible than unsecured borrowing.
It's widely used across manufacturing, construction, hospitality and transport, wherever a business needs expensive equipment to operate but doesn't want to tie up working capital buying it outright.
You choose the equipment or vehicle you need, and the finance provider either buys it on your behalf and leases it to you, or lends you the funds to buy it while retaining the asset as security.
Repayments are made monthly over an agreed term, commonly two to seven years depending on the asset's useful life, with the structure determining whether you eventually own the asset outright.
What are the risks with asset finance?
- Because the asset usually secures the finance, missed repayments can lead to repossession, which can be especially disruptive if the equipment is essential to daily operations.
- Committing to a long-term agreement on equipment that quickly becomes outdated, particularly technology, can leave you paying for something no longer fit for purpose.
- As with other secured business finance, defaults are reported to credit reference agencies and can make future borrowing harder, so speak to the lender early if repayments become difficult.
Why compare asset finance with us
You want to own the asset eventually
Hire purchase builds toward ownership with predictable fixed payments throughout the term.
You need to upgrade equipment regularly
A finance or operating lease avoids being stuck with outdated equipment once the term ends.
You need cash now from assets you own
Asset refinance unlocks capital tied up in equipment you already have on the books.
Asset finance options compared
How the main UK asset finance products differ on ownership and treatment.
| Product | Term | Own the asset? | Best for |
|---|---|---|---|
| Hire purchase | 1 – 7 years | Yes, at the end | Long-life plant and machinery |
| Finance lease | 1 – 5 years | No, you rent it | Equipment you'll upgrade |
| Operating lease | 1 – 4 years | No, returned | Vehicles and IT kit |
| Asset refinance | 1 – 5 years | Yes, retained | Releasing cash from owned assets |
What does asset finance cost?
Illustrative monthly cost on £60,000 of equipment funded over five years.
| Cost line | Hire purchase | Finance lease |
|---|---|---|
| Typical APR / rate | 6% – 14% | 6% – 15% |
| Deposit | 10% – 20% | 1 – 3 months rentals |
| Monthly payment | £980 – £1,180 | £1,020 – £1,220 |
| Ownership at end | Yours for a nominal fee | Return, extend or sell |
Expert advice
Spreading the cost of equipment protects working capital, but the cheapest headline rate is not always the cheapest deal.
“Compare the total payable across the full term, including documentation fees and the option-to-purchase charge.”
asset finance: pros and cons
Pros
- Spreads a large cost into manageable monthly payments
- The asset itself usually secures the finance, easing approval
- Frees up working capital for day-to-day running costs
- Interest and lease payments are often tax-deductible business expenses
Cons
- Total cost is higher than paying cash upfront
- The asset can be repossessed if repayments are missed
- Leasing means you never own the equipment
- Early settlement can carry a penalty on some agreements
How to compare asset finance
Look past the headline monthly payment and check these five things:
- 1
Total cost of finance
Compare the total amount repayable over the full term, not just the monthly figure, since terms and rates vary widely.
- 2
Ownership at the end
Confirm whether you'll own the asset, need to return it, or have an option to purchase it for a nominal fee at the end of the term.
- 3
Deposit required
A higher deposit lowers monthly payments but ties up more cash upfront — balance this against your working capital needs.
- 4
Early settlement terms
Check whether you can pay off the agreement early without a significant penalty if the business's cash position improves.
- 5
Flexibility for upgrades
If your equipment needs change quickly, check whether the lender allows upgrading to newer equipment mid-term.
Compare asset finance
See what's available for your business today. It takes just minutes.
Am I eligible for asset finance?
Most UK lenders will look at:
1. Trading history
Many lenders want at least one to two years of trading accounts, though some specialise in funding newer businesses with a strong asset and business plan.
2. The asset itself
Lenders assess the type, age and resale value of the asset, since it typically secures the finance directly.
3. Business financials
Recent accounts or management information showing the business can afford the monthly repayments.
4. Deposit or initial payment
Most agreements require a deposit, commonly 10-20% of the asset's value, reducing the amount financed.
Meet a bakery upgrading its ovens
The bakery needs a new commercial oven costing £24,000 but doesn't want to drain its cash reserves.
It arranges a hire purchase agreement over four years, paying a 10% deposit and fixed monthly instalments, taking ownership of the oven once the final payment clears.
The predictable monthly cost lets the bakery keep its working capital free for ingredients and staff wages while still upgrading its equipment immediately.
Asset finance or paying cash upfront?
Paying cash avoids any finance charges but ties up capital that could otherwise fund growth, cover payroll, or act as a buffer against slow months.
Asset finance is generally worth the extra cost when the equipment will generate revenue or savings quickly enough to cover the monthly repayment comfortably.
Many businesses use a mix — buying lower-cost, long-lasting items outright while financing larger or fast-depreciating equipment such as vehicles and technology.
How to compare and apply for asset finance
1
Tell us about your business
Share your trading history, turnover and what you need the product to do. It takes a couple of minutes.
2
We search the market
We compare providers across the UK on cost, features and eligibility so you only see options you can actually get.
3
Review your options
Fees, rates and terms side by side in plain English, with no jargon and no pressure to proceed.
4
Apply with confidence
Pick the provider that fits and complete the application online. We'll tell you exactly what documents you need.
Why choose Grow Your Business?
Wide choice of providers
We compare a broad range of UK providers so you can find the option that actually fits how your business operates.
Exclusive offers
We work hard to bring you exclusive deals, switching incentives and cashback where they're available.
Simple and fast
It takes just a few minutes to compare with us — and the deal you find could be well below what you pay today.
What types of asset finance are there?
There are more options available than ever, so it pays to match the product to how your business actually operates.
Hire purchase
You pay a deposit and fixed instalments, taking ownership once the final payment is made. Best if you want to eventually own the asset outright and can commit to fixed monthly costs.
Finance lease
You rent the asset for most or all of its useful life, with the lender retaining ownership throughout. Suited to equipment that needs regular upgrading, such as fast-moving technology.
Operating lease
A shorter-term rental than a finance lease, with the lender taking on more of the asset's resale risk. Good for equipment you need for a defined project or season rather than long-term use.
Asset refinance
Releases cash by borrowing against equipment you already own outright. Useful for raising working capital using assets already on your balance sheet.
Providers we compare
Banks, challenger lenders and specialist funders financing UK business equipment and vehicles.
Aldermore
Close Brothers
Shawbrook
Funding Circle
Bibby Financial
Lloyds BankComparing with us is a no-brainer
“Hire purchase let us take on a second machine without touching our overdraft, and it paid for itself inside a year.”
Gareth, Cardiff
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Read guideasset finance FAQs
Can new businesses get asset finance?
Some lenders specialise in funding newer businesses, particularly where the asset itself is easily resold, though most prefer at least a year of trading history.
What happens if I can't keep up repayments?
The lender can repossess the asset since it usually secures the agreement, so speak to them as early as possible if you're struggling, as many will consider a revised payment plan.
Is asset finance tax-deductible?
Lease payments are generally an allowable business expense, and hire purchase can qualify for capital allowances on the asset — always confirm the detail with your accountant.
Can I upgrade equipment during the agreement?
Some leasing agreements allow mid-term upgrades to newer equipment, though hire purchase agreements are typically fixed to the original asset.
Do I need a large deposit?
Deposits commonly range from 10-20% of the asset's value, though some agreements offer 0% deposit options in exchange for higher monthly payments.
Written by the Grow Your Business editorial team · Updated 26 July 2026