Lease finance
Rent the equipment for an agreed period, then extend, replace or return it. Lower monthly payments than hire purchase, with none of the residual value risk.
Request a callback- Typical amount
- £5,000 to £5m+
- Typical term
- 2 to 5 years
- Deposit
- Often one to three payments
- Ownership
- Stays with the funder
Figures are indicative market ranges at the time of writing, not offers or quotes. What is available to your business depends on the lender, your circumstances and the security available.
About lease finance
A lease is a rental agreement. The funder buys the asset and you pay to use it for an agreed period. At the end you can usually extend at a reduced rate, arrange a sale to a third party, or simply hand the equipment back and start again with something newer.
Because you are only paying for the portion of the asset's life that you actually use, monthly payments come in below hire purchase on the same equipment. The trade-off is that the asset never becomes yours, so there is nothing to sell at the end and nothing on the balance sheet to show for the payments.
Leases come in two broad flavours. A finance lease transfers most of the risks and rewards to you and typically runs for most of the asset's useful life. An operating lease is a shorter, genuine rental where the funder expects to re-let or sell the equipment afterwards. Which is available depends heavily on the asset and how predictable its resale value is.
Where leasing makes sense
- Technology and equipment that dates quickly, where you would rather upgrade than be left holding it.
- Assets you need for a defined period — a contract, a season, a specific project.
- Keeping monthly outgoings as low as possible while still getting the equipment you need.
- Avoiding the risk of a residual value that turns out lower than anyone expected.
- Rental payments are usually treated as an operating cost, which some businesses prefer for planning.
Things to be clear on
- You will not own the asset, however many payments you make.
- Handing equipment back can bring condition requirements, and charges if it comes back damaged or heavily worn.
- Extending beyond the initial term is common but the terms for doing so should be agreed at the outset.
- Cancelling mid-term is generally expensive, because the funder has priced the whole period.
- The tax and accounting treatment differs from hire purchase — worth confirming with your accountant.
Frequently asked
Can I buy the asset at the end of a lease?
Not directly, in most cases — that would make it a hire purchase agreement. What often happens instead is a sale to an unconnected third party, with the lessee receiving the bulk of the proceeds as a rebate of rentals. The exact mechanism varies by funder, so check it before you sign.
Is leasing cheaper than hire purchase?
Month to month, almost always. Over the whole life of the asset, usually not, because you end up with nothing to show for the payments. Leasing wins when you genuinely do not want the equipment at the end; hire purchase wins when you do.
What condition does the asset have to come back in?
Fair wear and tear for the age and use is the standard, but what that means in practice is defined in the agreement. On vehicles in particular, be sure you have read the return standard before the collection date rather than after it.
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Tell us what the money is for
A short conversation is usually enough for us to tell you what is realistic — including when the answer is that you should not borrow.
