Equipment
Purchasing machinery, tools or specialist equipment necessary for business operations
What is asset finance?
Asset financing is a type of business loan for buying or leasing equipment required for your business, such as vehicles or machinery. It can be useful for businesses that need to replace or purchase necessary equipment without paying a huge amount in up front costs.
The Finance and Leasing Association (FLA) reports that total asset finance new business grew by 11% in March 2025 compared to the same time in 2024, primarily driven by leading and hire purchases.
How does asset finance work?
Choose what type of asset finance you require and decide what you're going to purchase
The provider will fund your purchase and pay it back over instalments as with a regular loan
The loan will usually be secured against the assets you used the loan for until you pay it back in full
What are the different types of asset finance?
Asset finance can be split into a few different categories, including:
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Hire purchase (HP)
Hire purchase agreements give you immediate access to assets that you’ll own outright after completing a series of payments. You pay a deposit and fixed monthly instalments for the agreed term. Agreements generally last one-six years.
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Business contract purchase
Similar to a hire purchase, a business contract purchase also involves monthly repayments - but these only pay off the interest on the loan. You’ll still need to pay off the rest of the loan amount at the end of the term.
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Finance lease
A finance lease is where the finance provider purchases the asset themselves and leases it to you over a specified term, during which you’ll be responsible for its maintenance. After this ends, you may be able to extend or renew the lease or purchase the item, or even sell the item for the lender and potentially receive part of the fee.
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Operating lease
An operating lease is a good option for those who will only temporarily need certain equipment for business operations, as it allows you to lease equipment for a set time. If you take out an operating lease, the lender will be responsible for the equipment’s maintenance.
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Contract hire
Contract hires are commonly used for businesses vehicles - the lender will buy the vehicle or fleet that you need, and you’ll make repayments over the agreed term.
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Equipment leasing
Involves the lender buying assets, such as agricultural or haulage equipment, and leasing them to you for a fixed monthly sum. You can therefore access the assets without visibly borrowing money or using up capital.
How much can I borrow with asset finance?
The amount you can borrow through asset finance depends upon various factors concerning your business, including:
The equipment and machinery you need
Your company’s balance sheet
The potential lender’s view of your ability to meet repayments
Can a small business or start-up get an asset finance loan?
SMEs and start-ups may be able to access asset finance solutions, but approval can depend on factors such as their existing assets, accounts and credit ratings.
Given start-ups often don’t have a business track record, a start-up loan might be a better finance option to get initial funding.
What can I buy with an asset finance loan?
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Vehicles
Acquiring commercial vehicles, such as company cars, delivery trucks, vans or other transport assets
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Technology
Investing in computers, servers, software, or other technological infrastructure to enhance efficiency
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Furniture and fixtures
Obtaining office furniture, fixtures, or other essential items for a business workspace
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Buildings
Upgrading commercial property, such as office space, warehouses, or retail locations
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Cash injections
Using existing assets to help boost cashflow to cover overheads such as staff payroll and office rental
What are the pros and cons of equipment finance?
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Advantages
Allows you to get and use essential new equipment and other assets your business needs without needing to make a lump-sum payment upfront
Interest rates are often fixed, which means you’ll know how much you’ll be spending over the next few years, making it easier to plan ahead
Asset finance offers flexible repayment options, including tailored schedules that align with the business's cashflow to ease financial strain
In some instances you won’t need to pay for the maintenance and upkeep of the assets you’re leasing
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Disadvantages
Asset financing is generally more expensive than buying an asset outright, which means it’s worth making sure you aren’t overpaying
The asset may depreciate faster than the repayment schedule, potentially leaving it worth less than the outstanding loan amount
Asset finance often requires the asset itself as security, posing a risk of repossession and halting business operation in case of payment default
There might be limits on how you use the asset if you don’t own it outright yourself - for example, some vehicle finance lenders might implement mileage limits
Is my business eligible for an asset finance loan?
Your business will need to be established in the UK to be eligible for an asset finance loan. It can also be helpful if it has a proven track record of trading.
You can then compare options with MoneySuperMarket’s partner Funding Xchange to see what deals might be available to you.
Can I get asset finance with bad credit?
You may still be able to get asset finance with bad credit, as long as you have a solid business plan and the lender is confident your company will be able to keep up with payments.
However, you might find that a poor credit rating means that you cannot borrow as much and that interest rates will be higher.
There are also specialist lenders who provide bad credit business loans.
What are the alternatives to asset finance?
There are other funding options available for businesses, from start-up and business loans to business and company credit cards and potentially overdrafts for short-term solutions. Less traditional options also include P2P loans or crowdsourcing.
Compare asset finance with MoneySuperMarket
We’ve partnered with funding specialists to help provide companies with asset finance and other types of business lending. Here's how to get started...
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Tell us what you need
Let us know a few details such as how much you want to borrow, for what purpose and how long your firm has been trading
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We’ll compare deals
We’ll sift through our panel of leading lenders to show you indicative deals in just a few minutes along with any key features
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Click through to apply
Once you see a deal that might be suitable to your firm, we’ll connect you with the lender and you can make a firm application
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Learn more about business financing
What rates will I get on asset finance?
Interest rates for asset finance in the UK will vary based on factors such as the type of asset and its use, the lender’s view of risk and your company’s credit rating.
Securing a lower rate often depends on a strong balance sheet, business plan and credit profile. It's always advisable to compare offers from different lenders for the best terms.
Can my assets get repossessed?
Yes, in a worse case scenario when you cannot meet your payment requirements, then assets funded through asset finance can be repossessed or taken back if they are leased. This can also make future borrowing harder for the business.
Is asset finance regulated in the UK?
While business asset finance falls outside the direct regulation of the Financial Conduct Authority (FCA), certain regulated activities within the financial services sector, such as car hire purchase, are overseen by the FCA.
Many lenders in this domain are both authorised and regulated by the FCA. The Finance and Leasing Association (FLA), representing the UK's asset, consumer, and motor finance sectors, also issues recommended practice statements concerning leasing and asset finance.
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Reviewed on 11 Dec 2025 by
