Compare Asset Finance Deals

Asset finance is a way for businesses to acquire equipment, vehicles, machinery or technology without paying the full cost upfront. Instead of purchasing an asset outright with cash reserves, you spread the cost over a fixed period through regular monthly payments to a finance provider.

The process works similarly to personal car finance. A lender purchases the asset on your behalf or finances your purchase of it, and you make agreed repayments over a set term, usually between one and seven years. Depending on the type of agreement, you may own the asset at the end of the term or you may return it to the finance company.

Asset finance in the UK covers a broad range of business equipment. Common examples include commercial vehicles, construction plant, manufacturing machinery, IT hardware, office furniture, catering equipment and medical devices. Both hard assets (physical equipment with strong resale value) and soft assets (items like software licences or lower-value technology that depreciates quickly) can be financed, though lenders typically offer better rates on hard assets because they retain value as security.

The Finance and Leasing Association reported that UK asset finance new business reached over £38 billion in 2024, making it one of the most widely used forms of business funding. It is particularly popular among SMEs that need to preserve working capital while still accessing the equipment required to operate and grow. Rather than tying up tens of thousands of pounds in a single purchase, you keep that cash available for day-to-day operations, payroll or other investments.

If you are weighing up broader funding options, comparing small business loans alongside asset finance can help you decide whether spreading equipment costs or borrowing a lump sum better suits your cash flow.

Understanding which type of asset finance suits your business depends on whether you want to own the asset, how long you need it, and how you want to handle tax and accounting. The four main types each serve a different purpose, and choosing the wrong one can cost you thousands over the term.

Hire purchase (HP) is the most straightforward option. You pay a deposit, typically 10% to 20% of the asset value, then make fixed monthly payments over the agreed term. Once you make the final payment, ownership transfers to you. VAT is payable upfront on the full asset price, though you can reclaim it if you are VAT registered. HP suits businesses that want to own their equipment outright and plan to use it for its full working life.

A finance lease works differently. The finance company buys the asset and leases it to you for an agreed period. You never take ownership, but you are responsible for maintenance and insurance. At the end of the lease, you can extend the agreement, return the asset, or sell it on behalf of the lessor and receive a share of the proceeds. VAT is charged on each rental payment rather than upfront, which can smooth cash flow. Finance leases suit businesses that want to use high-value equipment without committing to ownership.

An operating lease is similar to a finance lease but typically covers a shorter period of one to three years. The lessor retains the risk of the asset losing value, and the rental payments are fully deductible as a business expense. Operating leases suit businesses that need equipment for a specific project or prefer to upgrade technology regularly.

Asset refinance lets you unlock cash from equipment you already own. A lender values the asset and advances you a percentage of its current market value, usually 70% to 90%, with the asset used as security. This is useful if you need working capital but do not want to sell equipment. It works on a similar principle to invoice finance, using a business asset rather than unpaid invoices as the basis for borrowing.

Asset finance interest rates in the UK typically range from 4% to 15% APR, depending on the asset type, your business credit profile, the finance product and the repayment term. With the Bank of England base rate at 3.75% as of mid-2026, rates at the lower end are available to established businesses financing hard assets with strong resale values. Newer businesses or those financing soft assets will generally sit toward the higher end of the range.

Beyond the headline rate, watch for additional costs that affect the total amount you pay. Many providers charge an arrangement fee (typically 1% to 2% of the finance amount), a documentation fee (around £150 to £300) and an option-to-purchase fee on hire purchase agreements. Some lenders also charge early settlement fees if you want to clear the agreement ahead of schedule, which can reduce the savings you might expect from paying early.

Here is a worked example. A bakery financing a £40,000 commercial oven on a five-year hire purchase agreement at 7% APR, with a 10% deposit of £4,000, would finance £36,000. The monthly repayment would be approximately £713, bringing the total repaid to around £42,780 plus the £4,000 deposit. The total cost of the oven in this example is £46,780, meaning the cost of finance is £6,780 spread over five years.

To see how different loan amounts and terms affect your monthly payments, use a business loan calculator to model various scenarios before committing to an agreement.

The regulation of asset finance in the UK depends on who is borrowing and for what purpose. If you are a sole trader or partnership using financed equipment for personal as well as business purposes, the agreement may fall under the Consumer Credit Act 1974 and require the lender to be authorised by the Financial Conduct Authority. For limited companies and larger businesses borrowing purely for commercial purposes, asset finance agreements are generally unregulated and fall outside the FCA's remit.

This distinction matters because unregulated agreements carry fewer automatic protections. You will not have the same rights to a cooling-off period, and complaints cannot be escalated to the Financial Ombudsman Service. Always check whether your agreement is classified as regulated or unregulated before signing, and read the terms carefully regardless of the classification.

Eligibility criteria vary between providers, but most will assess the following:

• Trading history: most lenders require at least 12 months of trading accounts, though some will consider businesses with as little as 6 months of verifiable trading
• Annual turnover: minimum thresholds vary by provider, but £50,000 or more is a common benchmark for standard terms
• Credit profile: personal and business credit checks are standard. CCJs, defaults or a thin credit file will narrow your options but will not necessarily disqualify you from all providers
• Asset type: hard assets such as vehicles and machinery are easier to finance than soft assets like software or low-value IT equipment
• Deposit: some products require 10% to 20% upfront, while leases may require no deposit at all

If your credit history is less than perfect, you may still qualify through specialist lenders who focus on bad credit business loans. Rates will be higher and you may need to provide a larger deposit or additional security, but options exist across the market. Newer businesses can also access asset finance, particularly through government-backed startup loans that can be used to purchase business equipment in the early trading period.

Asset finance is not the only way to fund equipment or release working capital. Depending on your situation, an unsecured business loan, a secured loan or asset-based lending might be more suitable. Understanding the differences between asset finance and these alternatives helps you avoid overpaying or choosing a product that does not match your cash flow needs.

An unsecured business loan gives you a lump sum to spend on anything, including equipment. You repay over a fixed term with interest, and the lender has no claim on a specific asset. This offers more spending flexibility but typically comes with higher interest rates (often 6% to 20% APR) because the lender takes on more risk without security. If you only need equipment and want to keep costs down, asset finance will usually be cheaper because the asset itself acts as collateral.

Asset-based lending (ABL) is a broader form of funding where a lender advances money against the combined value of multiple business assets, including stock, debtors, plant and property. ABL facilities are typically larger, starting at £500,000, and suit businesses with significant tangible assets on their balance sheet. Asset finance, by contrast, is tied to a single specific asset and works at much lower values, making it accessible to smaller businesses that need a single piece of equipment.

A revolving credit facility offers another alternative if your funding need is ongoing rather than tied to a single purchase. You draw down and repay as needed, paying interest only on what you use. This suits working capital management but is not designed for acquiring specific assets.

The right choice depends on whether you need a specific asset, how much flexibility you want in how funds are used, and whether you can offer security to reduce interest costs.

The tax treatment of asset finance depends on the type of agreement and your business structure. Getting this right can significantly reduce the effective cost of acquiring equipment, so it is worth understanding the differences before you commit.

With hire purchase, the asset appears on your balance sheet and you can claim capital allowances on its cost. Under the Annual Investment Allowance (AIA), you can deduct up to £1 million of qualifying plant and machinery expenditure from your taxable profits in the year of purchase. For the 2026/27 tax year, full expensing also allows companies to claim 100% first-year relief on qualifying new plant and machinery, effectively writing off the entire cost against corporation tax in year one. Interest charges on HP agreements are separately deductible as a business expense.

With finance leases and operating leases, the rental payments are typically treated as an allowable business expense, spread over the term of the lease. You cannot claim capital allowances because you do not own the asset, but the full rental cost reduces your taxable profit each year. This can simplify your accounting compared to tracking depreciation and capital allowances separately, which some smaller businesses prefer.

VAT treatment also differs between products. On hire purchase, VAT is due upfront on the full asset value and is reclaimable if you are VAT registered. On leases, VAT is charged on each individual payment, spreading the liability over the term and reducing the initial cash outlay.

Always take advice from your accountant on which structure gives you the best tax outcome. The difference between HP and a lease can amount to thousands of pounds depending on your corporation tax position, cash flow requirements and whether you qualify for full expensing.

Not all asset finance providers operate in the same way. Some are direct lenders, others are brokers who search across a panel of funders, and some specialise in particular sectors or asset types. Using a structured checklist to compare your options prevents you from choosing based on headline rates alone, which rarely tells the full story of what you will pay.

When comparing the best asset finance companies in the UK, check the following:

• Total cost of finance: look beyond the APR to include arrangement fees, documentation fees, option-to-purchase charges and any early settlement penalties
• Sector experience: a provider familiar with your industry will understand the assets you need and their typical depreciation profiles, leading to more accurate valuations and potentially better terms
• Speed of decision: some lenders offer same-day decisions for straightforward applications, while others take two to three weeks for larger or more complex facilities
• Flexibility on term: ensure the repayment term matches the useful life of the asset so you are not paying for something long after it has stopped being productive
• Credit appetite: if your business is newer or has credit issues, choose a provider experienced in working with those profiles rather than wasting time on applications likely to be declined
• Broker vs direct: brokers search across multiple lenders and may find deals you would not access directly, but check whether they charge a separate fee on top of the lender's arrangement costs
• End-of-term options: understand what happens when the agreement ends, particularly whether you can upgrade, extend or return the asset without penalty

Using an independent broker gives you whole-of-market access without being tied to a single lender's product range. This is especially valuable if your situation is not straightforward or if you want to compare several offers side by side before committing.

Almost any tangible business asset can be financed, but lenders assess each asset category differently based on its expected useful life, resale value and depreciation rate. Understanding how lenders view different asset types helps you set realistic expectations on the rates and terms you will be offered.

Hard assets are physical items with a strong secondary market and predictable resale values. These are the easiest and cheapest to finance. Common examples include:

• Commercial vehicles (vans, trucks, HGVs)
• Construction equipment (excavators, cranes, scaffolding)
• Manufacturing machinery (CNC machines, lathes, presses)
• Agricultural equipment (tractors, harvesters, irrigation systems)
• Medical and dental equipment
• Catering and hospitality equipment (ovens, refrigeration units)

Soft assets are items that depreciate quickly or have limited resale value. Lenders view these as higher risk, so you can expect higher rates, shorter terms and potentially larger deposit requirements. Soft assets include:

• IT hardware (laptops, servers, networking equipment)
• Software licences
• Office furniture and fit-outs
• Telecommunications systems
• Security and CCTV equipment

Some assets sit in a grey area. A high-specification 3D printer used in manufacturing might be treated as a hard asset by one lender and a soft asset by another, depending on their experience with that market. If you are financing something unusual or niche, working with a provider who has sector-specific expertise will typically get you better terms than approaching a generalist lender.

Most lenders will finance assets valued from as little as £1,000 up to several million pounds, though the sweet spot for standard asset finance is typically £5,000 to £500,000. For amounts above this, bespoke facilities and structured finance products become more common.