Asset Finance Calculator

Asset finance spreads the cost of equipment, vehicles or machinery over a fixed term instead of paying the full cost upfront. The two most common structures are hire purchase (HP), where you're treated as the owner from day one and the asset is yours outright once the final payment clears, and a finance lease, where you pay rentals for the use of the asset and either hand it back, extend the rental, or arrange its sale at the end of the term.

The monthly rental is calculated by spreading the amount financed (the asset cost, less your deposit, less the present value of any balloon or residual payment) over the term at the agreed rate. A balloon payment lowers the monthly rental because a chunk of the cost is deferred to a single lump sum at the end, which can help cash flow but needs planning for when it falls due.

The tax treatment differs between the two structures. Hire purchase generally lets the company claim capital allowances on the asset from day one, so it can qualify for the Annual Investment Allowance (100% relief up to £1 million), full expensing, or the new 40% first-year allowance on new plant and machinery. A finance lease instead lets you deduct the rental payments as they're paid, without claiming a capital allowance on the asset itself. Worked example: a £120,000 machine financed with a £12,000 deposit over 5 years at 7.5% costs around £2,164 a month, with total finance cost of roughly £21,800 over the term, before any tax relief on the asset is taken into account.