The asset is the security
Asset and equipment finance
Fund the machine, the plant or the fit-out using the asset itself as security. Usually lower rates and longer terms than unsecured lending.
Asset Finance at a glance
- Amount
- £10,000 to £2,000,000
- Term
- 12 to 60 months
- Security
- The asset itself. Under hire purchase or a lease the lender owns it until the agreement ends. A personal guarantee may be requested.
- Time to funding
- Moves from a supplier invoice; private sales and imports take longer.
- Typical use
- Excavators, CNC machines, commercial kitchens, dental chairs, forklifts, IT and telephony, shop fit-outs
- What you'll need
- A supplier quote or invoice, your Companies House number or trading details, photo ID, and recent bank statements
What it is
What is asset finance?
Asset finance is funding secured by the thing you are buying. Under hire purchase or a lease the finance company owns the asset during the agreement, which means it has something to recover if payments stop. That security is why the rate is usually lower and the term longer than an unsecured loan for the same amount.
Three structures do most of the work in the UK: hire purchase, a finance lease and an operating lease. They differ on who owns the asset at the end, how VAT is handled, and how it lands on your balance sheet and tax computation. The monthly payments can look almost identical while the tax outcome is very different, so that decision belongs to your accountant, not to the equipment salesperson.
Worked example
A worked example
- A groundworks contractor buys a £100,000 excavator (plus VAT) on hire purchase over 60 months with a £20,000 final balloon.
- The balloon is paid at the end of month 60, and ownership passes to the business with it.
- On hire purchase the VAT on the price is generally due up front and, for a VAT-registered business, reclaimed through the VAT return. Your accountant should confirm the treatment.
- Whatever the rate, the test is how many billable hours a month cover the payment.
General information, not tax advice. Capital allowances, including the Annual Investment Allowance, may apply to qualifying plant and machinery. Speak to your accountant before you sign.
Is this right for you?
Is asset finance right for you?
Good fit if…
- The asset earns money. A machine that bills hours is the easiest thing in commercial finance to fund.
- You have a supplier quote or invoice ready, which is what starts the process.
- You want to keep your working capital and your overdraft free for wages and stock.
- You would rather spread the cost over the asset's working life than pay cash up front.
Probably not if…
- You need the money for wages, stock or a tax bill. That is not asset finance: look at an unsecured loan.
- The asset is very old or very specialised with no resale market. Lenders lend against what they can sell.
- You cannot produce a quote or invoice yet. Nothing moves until the lender knows exactly what it is funding.
- You have not asked your accountant which structure suits your business. Signing first and asking later is how businesses end up with the wrong tax and VAT treatment.
What it costs
What asset finance costs
Secured lending prices better than unsecured. The asset type moves the number as much as your credit file.
- Interest rate
- Rates are set by the lender for your deal, not by us, and depend on your trading, your credit file and the product. Asset finance generally prices below unsecured lending because the lender holds security. New assets from a dealer price better than old assets from a private seller.
- Documentation fee
- A one-off documentation or arrangement fee is usually charged at the start of the agreement.
- Ongoing and end fees
- Some agreements carry an option-to-purchase fee at the end of a hire purchase, or a secondary rental on a lease.
- Paying it out early
- Most of these are fixed rate agreements, so an early settlement is a calculated figure rather than the remaining balance. Get a settlement quote before you commit to selling or upgrading.
Bizzloans is a commercial finance broker, not a lender. The lender that funds your deal pays us a commission, which we disclose to you. You pay us nothing to compare.
Eligibility
Who can apply
- A UK business: limited company, LLP, partnership or sole trader
- Photo ID (passport or driving licence) for each director, partner or owner
- Bad credit considered
- A supplier quote or invoice for the asset
Don’t meet these? Talk to us. We have lenders for most situations, and we’ll tell you straight if we don’t.
Contact usWhat you'll need
What you’ll need
No documents
To get a quote
- Nothing formal. The asset, the price and your trading history is enough for indicative numbers.
Once you pick a lender
To settle
- The supplier's invoice, made out to your business, with the serial number
- Your Companies House number, and photo ID and proof of address for each director
- Recent business bank statements
- For larger amounts, your latest filed accounts or management accounts
- For private sales: an outstanding finance check and the seller's identity and bank details
How it works
How it works
Same day
Send us the quote
The supplier quote or invoice tells us the asset, the age, the price and the seller type. Those four things decide which lenders will look at it and how they price it.
Your accountant's call
Pick the structure with your accountant
Hire purchase, finance lease or operating lease, and a balloon if you want one. We put the numbers in front of your accountant so the decision is made on tax and VAT, not on the monthly payment.
The lender pays the supplier
The lender pays the supplier directly and you take delivery of the asset. Private sales add time for the finance check and seller verification.
This vs the alternative
Hire purchase vs finance lease vs operating lease
The monthly payments can look nearly identical. What changes is who owns the asset at the end, how VAT is handled, and what your accountant can claim.
| Hire purchase | Finance lease | Operating lease | |
|---|---|---|---|
| Who owns the asset during the term | The lender, until the final payment. | The lender. You are renting it for most of its life. | The lender. You are renting it for part of its life. |
| At the end | Ownership passes to you once the final payment and any fee are made. | You usually continue on a secondary rental, or the asset is sold and you share the proceeds. | You hand it back, extend, or upgrade. |
| VAT | Generally payable up front on the price, then reclaimed if you are VAT registered. | Charged on each rental. | Charged on each rental. |
| Tax | You are generally treated as the owner, so capital allowances may be available. | Rentals are generally treated as an expense. | Rentals are generally treated as an expense. |
| Who it suits | Businesses buying an asset they intend to keep. The common default. | Businesses that want to use an asset for most of its life without owning it. | Businesses that want to hand equipment back and upgrade: IT, telephony, fast-ageing kit. |
General information, not tax advice. Treatment depends on your business and the accounting standard you report under. Your accountant should pick the structure before you sign.
Balloon payments, without the sales pitch
A balloon, sometimes called a final or residual payment, is a slice of the cost pushed to the end of the term. Set a 30% balloon on a £100,000 machine and you repay £70,000 across the term, then owe £30,000 at the end.
It lowers the monthly payment. It does not lower what the finance costs you. You carry interest on that final chunk for the whole term, so the total paid goes up, not down.
- Lenders cap the balloon, and the cap usually falls as the term gets longer.
- When it falls due you pay it, refinance it, or sell the asset and settle from the proceeds.
- The risk worth naming: if the asset is worth less than the balloon at the end of the term, you cover the gap yourself.
- Rule of thumb: set the balloon at or below what the asset will honestly be worth second-hand on the day it falls due.
What lenders check on used and private-sale equipment
- Age at the end of the term, not age today. A 10-year-old machine on a 5-year term is assessed as a 15-year-old machine.
- A finance check confirming the seller owns it and no outstanding finance is attached to it.
- For private sales, the lender pays the seller directly once the checks clear. Never pay a private seller yourself before that happens.
FAQ
Asset Finance questions
What is hire purchase?
Can I finance second-hand equipment?
Do I need a deposit?
Can I include delivery and installation?
How does VAT work?
What about capital allowances?
Can I raise money against equipment I already own?
Do I need filed accounts?
A person reads this, not a scoring engine
A named advisor takes your file to the lenders on the panel that fund your industry and your turnover, and tells you plainly when asset finance is the wrong answer and what to use instead.
Ready when you are
Compare Asset Finance today
Comparing is free, you’re never locked in, and checking won’t affect your credit score. If we can’t help, we’ll tell you that too.
