Equipment purchase

Asset and equipment financing

Term financing specifically for machinery, equipment or vehicles, where the asset itself usually serves as security for the facility.

What it is

Term financing specifically for machinery, equipment or vehicles, where the asset itself usually serves as security for the facility.

The business need it can address

Buying productive equipment — a machine, a production line, a delivery vehicle — that will pay for itself through the revenue it helps generate.

How it works in the business

The bank funds the purchase and takes security over the asset. You use the equipment while repaying over a period matched to the asset's useful life.

How repayment, settlement or ownership works

Fixed instalments over a tenure that should not exceed the asset's productive life. Ownership typically transfers fully once the facility is settled.

Costs, risks and terms to verify

Verify the margin of financing (how much of the price is funded), the tenure versus the asset's real lifespan, insurance requirements, and repossession terms if instalments are missed.

What it may work alongside

Often paired with a working-capital facility — the machine still needs materials, stock and wages around it.

What it may be a poor fit for

Assets that depreciate faster than the repayment period, or equipment whose output the business cannot yet sell.

Questions to ask the bank or provider

• What percentage of the purchase price will you finance?
• How does the tenure compare with the asset's useful life?
• What are the insurance and repossession terms?

Official source connection pending

Hire purchase and leasing

Asset finance where the financier owns the asset during the term: with hire purchase you own it at the end; with leasing you rent it and may return, renew or buy it.

What it is

Asset finance where the financier owns the asset during the term: with hire purchase you own it at the end; with leasing you rent it and may return, renew or buy it.

The business need it can address

Vehicles and equipment where you want fixed payments and a clear path to ownership (hire purchase), or lower commitment and easier upgrades (leasing).

How it works in the business

The financier buys the asset and you pay instalments for its use. Hire purchase ends with ownership transferring to you; a lease ends with a return, renewal or purchase option.

How repayment, settlement or ownership works

Fixed instalments over the term. With leasing, the asset goes back or is bought at an agreed value; with hire purchase, the last payment makes it yours.

Costs, risks and terms to verify

Verify the effective rate (flat rates look cheaper than they are), total payable over the term, early-settlement rebates, maintenance responsibilities, and end-of-term conditions.

What it may work alongside

Sits beside working-capital facilities; leasing can preserve bank credit lines for other needs.

What it may be a poor fit for

Businesses that need to modify the asset heavily (lessors restrict this), or where bank asset financing is cheaper for the same asset.

Questions to ask the bank or provider

• What is the effective annual rate, not the flat rate?
• What is the total amount payable over the whole term?
• What are my options and obligations at the end of the term?

Official source connection pending

Leasing and non-bank asset finance

Equipment and vehicle finance from non-bank finance companies — similar in shape to hire purchase or leasing, often with different approval criteria than banks.

Term and working-capital financing

A fixed sum of financing from a bank, repaid over an agreed period. Term financing funds a specific purpose; working-capital facilities fund day-to-day operations.