Leasing and hire purchase

Finance that allows businesses to buy equipment, machinery and vehicles they might otherwise be unable to afford.

Leasing allows your business to use an asset in exchange for rental payments, which may include an advanced rental, over a set period.

A lease works as a rental agreement. You agree to rent an asset for a period with a fixed or minimum term and make regular rental payments for as long as the lease contract runs. At the end of the contract, you may have an option to continue renting, or to return or possibly replace the equipment.

Different types of leasing options

Finance lease

You’re responsible for paying for most of the item’s cost over the period of its life, and you’re responsible for maintaining the asset as if you own it.

Operating lease

You won’t pay for the full cost of the asset as effectively you’re renting it for a period shorter than its economic life. As a result, the lease provider retains the risk and reward of ownership, while you remain responsible for keeping the asset in good working order during the agreement period.

Hire purchase is when you agree to buy an asset from the lender over a specified period. You own the item at the end of the contract. Usually, there is a small fee to secure title to the asset.

Like lease agreements, hire purchase allows you to acquire vital equipment and machinery without large upfront costs that can put a strain on your cashflow and working capital.

Hire purchase contracts usually involve a deposit and fixed payments over an agreed term.


You can apply for a lease or hire purchase agreement:

  • with a finance provider
  • from an equipment provider or manufacturer
  • through a broker

With leasing and hire purchase, there are few restrictions on:

  • who or what type of business can apply
  • the type of business assets you can fund

The biggest factor in getting approval for this finance is proving that you're able to make the rental payments. And even then, you don’t necessarily need to be profitable, just cash positive.

Providers can also consider the revenues that the asset investment may generate for your business and the impact that it will have on your ability to service the rentals.

Another important factor is your credit rating. A poor credit rating could make approval more difficult but it’s not always a barrier.

Good rates of approval

Success rates are high for leasing and hire purchase applications.

Quick turnaround

Leasing and hire purchase deals are generally speedy. For standard pieces of equipment, such as a vehicle, it could take just a few days.

Few restrictions

You can access leasing and hire purchase regardless of your sector, your location, or the size or age of your business.


A hire purchase agreement allows you to own the asset at the end of the contract. With a finance lease, you rent the asset for as long as you need it, then return it.

And there aren’t many assets you can’t acquire through leasing or hire purchase.

Could affect your credit report

Leasing and hire purchase providers will conduct credit checks when you apply for finance. This may have an impact on your credit report.


If you want to secure the asset at the end of the contract, you may have to pay a fee to do so.

Losing the asset

If you default on your payments, the lender may recover the asset. This could harm your credit rating.

Here are some important questions you'll need to consider before proceeding with leasing or hire purchase:

  • What are the fixed payments?
  • How long is the contract?
  • What happens at the end of the contract?
  • Are there options for a secondary rental period?
  • Is this the best option for my business?
  • Can I afford the monthly repayments/rentals or does the contract put too much stress on my working capital?
  • Do I have a good credit rating?
  • Do I want to own the asset at the end of the contract? If so, will I have to pay a fee?
  • Am I responsible for maintaining the asset, or is the lease provider?
  • Are there tax benefits I or the finance provider could make use of when acquiring the asset?

You can search for leasing and hire purchase providers online.

Before you apply, use this checklist to help decide whether these types of finance are suitable for your business.

Other finance options

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Corporate Venture Capital

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Purpose of financessss Acquisition, research and development
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Time of finance 6-12 months
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Annual turnover Depends on the business
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Private Equity firms invest in established businesses in return for a large or controlling stake, to help them grow to the next level.
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Purpose of financessss Creating new products, acquisition finance, product development, project fulfilment, entry into new markets
Amount of finance Up to £4.3m without a prospectus, higher with a prospectus
Duration of finance Dependent on the business being funded
Cost of finance This is platform specific. Platforms often charge a success fee (usually a percentage of the amount raised) with a listing fee. Others will charge a percentage of profit
Time of finance Once your documents are in order, it can take as little as a month
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Business stage Pre-revenue through to more established businesses
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A business borrows money through an online platform and pays it back with interest over an agreed period.

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Businesses with a trading history that meet the eligibility criteria of the platform you choose.

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Get a loan quickly and maintain full control of your business.

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Business stage Established with a trading history
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