Definition
Asset finance is funding for business assets such as vehicles, trucks, machinery and equipment, where the asset itself usually secures the finance. Common structures are chattel mortgages, finance leases, operating leases and hire purchase. The asset itself gives the lender a fallback, so approval tends to be simpler than for unsecured borrowing, the cost is often lower, and the term can be set to roughly how long the asset stays useful.
Asset finance is built around a simple idea: the thing you are buying helps secure the money you are borrowing.
Structures
- Chattel mortgage: title is yours from day one, with the financier registered as secured party.
- Finance lease: the financier owns it; you may buy it at the end.
- Operating lease: you use it and hand it back.
- Hire purchase: the financier keeps title until you make the last instalment.
Why it is accessible
Because the lender can recover a resaleable asset, asset finance is often available to newer businesses or those with modest credit blemishes, and usually costs less than unsecured lending. The asset’s age, type and resale market all matter.
Plan the payback
Make sure the asset will earn or save more than it costs. Our guide to testing equipment return helps. For asset finance options, make one enquiry.
Common questions
Is asset finance available for used assets?
Yes, subject to age, condition and resale value. Lenders may require a deposit or shorter term for older assets.
Can new businesses get asset finance?
Often yes, because the asset provides security. A deposit and industry experience help.
Sources and further reading