Equipment finance lets you get the machinery, tools or technology your business needs without paying the full cost upfront. It's a common option for businesses that rely on specific equipment to operate or grow.

How equipment finance works

Rather than buying equipment outright, you spread the cost over an agreed period through regular payments, with the equipment itself often used as security for the finance. This means the lender has some protection, since they can reclaim the equipment if payments stop, which often makes this type of finance more accessible than an unsecured loan for the same amount.

Types of equipment finance

There are a few common structures, and the right one depends on whether you want to own the equipment eventually:

•        Hire purchase, where you own the equipment outright once all payments are made

•        Leasing, where you pay to use the equipment for an agreed period without ever owning it

•        Refinancing existing equipment you already own, releasing cash tied up in it

Choosing between the options

If the equipment has a long useful life and you want to keep it long term, hire purchase usually makes sense, since you'll own it once payments are complete. If the equipment becomes outdated quickly, such as certain technology, leasing can work better, since you're not left holding an ageing asset with limited resale value. Think about how long you'll realistically use the equipment before choosing between them.

What to check before agreeing

Compare the total cost across the full term, not just the monthly payment, and check what happens at the end of the agreement, particularly for leasing, since terms vary on whether you can extend, return, or purchase the equipment. It's also worth checking whether maintenance or insurance is included, since these can be significant additional costs if not built into the agreement.