Aberdeen Corporate Finance | Premium Commercial Finance Broker

Asset finance can be straightforward, but it is important to understand how the different products work, what your obligations are, and how the arrangements affect your business. Below are answers to the questions we are most frequently asked.

What is the difference between hire purchase and leasing?

Hire purchase gives you ownership of the asset at the end of the agreement after all payments are made. With leasing (finance lease or operating lease), the finance company retains ownership throughout. The right choice depends on whether you want to own the asset, how you wish to treat it for tax purposes, and your balance sheet preferences.

Can I finance used or second-hand equipment?

Yes. Most asset finance providers will finance both new and used equipment. The terms may differ — used assets may attract slightly higher rates and shorter terms — but funding is widely available for quality second-hand assets across all equipment types.

How quickly can asset finance be arranged?

For straightforward cases, credit decisions can be obtained within 24–48 hours. Once approved, documentation can typically be completed within a few days. The total process from enquiry to delivery of the asset is usually 1–2 weeks for standard transactions.

Do I need to provide a deposit?

Not necessarily. Many asset finance products offer 100% funding of the asset cost, including delivery and installation. However, providing a deposit (typically 10–20%) can reduce your monthly payments and may improve the interest rate offered.

Will I need to provide a personal guarantee?

For limited companies, personal guarantees from directors are commonly required, particularly for newer businesses or larger facilities. The requirement varies by lender and the strength of the company's balance sheet and trading history.

What happens at the end of a finance lease?

At the end of a finance lease, you typically have three options: enter a secondary rental period at a nominal rate, arrange for the asset to be sold to a third party (with any proceeds shared), or return the asset to the lessor. You do not automatically take ownership.

Can I settle the agreement early?

Most agreements allow early settlement, but early termination charges may apply. The settlement figure typically includes all remaining rentals (possibly discounted for early payment) and any applicable fees. Some products offer penalty-free early settlement.

Is asset finance available for start-up businesses?

Yes, though the options may be more limited. Some asset finance providers specialise in start-up lending, assessing the management team's experience and the viability of the business plan rather than relying solely on trading history.

What types of assets can be financed?

Almost any tangible business asset can be financed — vehicles, plant and machinery, IT equipment, office furniture, catering equipment, medical equipment, and more. Some soft assets (such as software licences) can also be included as part of a bundled finance package.

How does sale and leaseback work?

If your business owns unencumbered assets, you can sell them to a finance company and lease them back. You receive a lump sum payment (the asset's value) and continue using the equipment while making regular lease payments. This releases capital without disrupting your operations.

Important Notice: The above answers are for general guidance only. Specific terms and conditions vary by provider. Aberdeen Corporate Finance Limited is not regulated by the FCA.

Frequently Asked Questions