Hire purchase
You pay a deposit and instalments, and title transfers to you at the end. The asset sits on your balance sheet from day one and you carry residual value risk. This suits long-life equipment you intend to keep and run beyond the finance term.
Finance lease
The funder owns the asset and you use it for substantially all of its economic life. You take the risks and rewards of ownership without title, and rentals are usually deductible as an expense. Suits businesses that want use rather than ownership but expect to keep the asset long term.
Operating lease
The funder retains residual value risk and takes the asset back at the end. Rentals are lower because you only fund the depreciation over the term. This suits assets that date quickly — IT, vehicles, some medical and production equipment — or where you want flexibility to upgrade.
Refinance and sale-and-leaseback
Existing owned assets can be refinanced to release capital, either as a straight refinance or a sale-and-leaseback. This is a common way to fund growth or an acquisition without new external security, provided the assets are unencumbered and hold value.
Frequently asked questions
Can I finance used equipment?
Yes. Funders will look at age, remaining useful life, serial-number identifiability and secondary market depth. Older or specialist assets attract shorter terms and larger deposits.
How much deposit is needed?
Typically 0% to 20% depending on asset type, covenant strength and whether the asset is new. Strong covenants on mainstream assets regularly achieve nil deposit.
Which option is best for tax?
It depends on your jurisdiction and capital allowance position. Hire purchase usually gives access to capital allowances; leases usually give a deductible rental. Take advice from your accountant — GFG does not provide tax advice.
Last reviewed: 2026-08-15