Asset finance is a way to finance buying a specific asset for your business, for example new machinery, office equipment or a vehicle.

Asset finance also covers borrowing against your existing business assets. This is called asset refinancing.

Borrowing is secured against the asset you are buying until the finance agreement is paid off. There are several types of asset finance, including:

  • Hire purchase agreements, where the lender buys the item on your behalf. You then pay a set amount each month and own the equipment at the end of the term.

  • Leasing agreements, where you pay monthly to use equipment but do not automatically own the item at the end of the term.

  • Refinancing agreements, where a business sells an asset or piece of equipment to an asset finance company to raise funds. They then lease it back over a fixed term.

Why use it?

Asset financing can allow your business to buy equipment or machinery that you otherwise might not be able to afford.

It can also free up funds you would spend on buying assets to invest elsewhere in your business.

What assets can you buy?

Asset finance is sometimes called equipment financing or machinery finance, because these are common items businesses buy.

Other items you can buy using asset finance include:

  • Vehicles

  • Office equipment

  • Medical equipment

  • Software

Asset finance pros and cons

  • You can buy the latest equipment

  • Most have fixed interest rates

  • Leasing company pays for repairs

  • Easier to get than other loans

  • It can cost more overall

  • You may have to pay a deposit

  • You can't claim capital allowances

  • Hard to cancel long term contracts

How to get the right asset finance

To find the right asset based lending for your business look at:

  • How much you want to borrow: Work out how much the item you need to buy costs. This is especially important if it is being custom made for your business.

  • How long you need to borrow for: Finance terms can last anywhere between 1 to 7 years. Choosing a longer term may make your repayments smaller, but will usually mean you pay more overall.

  • What assets you want to buy: This may dictate which asset finance company you can use, especially if you want to finance an unusual item.

Once you know this information, get quotes from lenders who can offer the type of borrowing your business needs and then go with the cheapest option.

This comparison shows lenders who offer asset finance options and the different terms you can borrow over.

Asset finance FAQs

Q

What is asset backed finance?

A

It is where you use a business asset, for example outstanding invoices, to borrow money and that loan is secured against those assets.

Q

How long will it take?

A

It depends on the asset your business needs to finance, but some lenders can have a finance agreement in place within 24 hours.

Q

Will I have to pass a credit check?

A

Yes, your business will need to pass affordability and credit checks.

Q

How much can I borrow?

A

It depends on factors like your revenue and other financial liabilities, most lenders can offer finance up to 1 million, sometimes more.

Q

Can I finance just part of the purchase?

A

Yes, if you only need to borrow part of the cost amount you can normally do this, although not all lenders offer it so check first.

About our asset finance comparison

Q

Who do we include in this comparison?

A

We include loans and finance deals available directly from lenders and through brokers on our panel. They are all regulated by the Financial Conduct Authority (FCA). Here is more information about how our website works.

Q

How do we make money from our comparison?

A

We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.

You do not pay any extra and the deal you get is not affected.