Last updated: 15 Sep 2026

Business finance lease

A business finance lease enables you to use a vehicle, machine or piece of equipment for an agreed term through fixed monthly payments, without buying it outright. Your business gets the asset working for you straight away, spreading the cost instead of paying for it upfront, with a choice of options once your term ends.

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What is a finance lease?

A finance lease lets your business use a vehicle, machine or piece of equipment for a fixed term, in exchange for regular payments to the company that owns it. The leasing company buys the asset and leases it to you, so you never need to find the money to buy it outright.

Your business takes on the running costs, insurance, maintenance and the risk of what the asset is worth when the lease ends, without legal title ever passing to you unless you take up a sale option at the end. That's the main difference from hire purchase, which is built around your business eventually owning the asset.

Why choose a business finance lease?

  • Free up cash for other priorities

    Spreading the cost of a vehicle, machine or piece of equipment across fixed monthly payments keeps cash in your business for stock, wages or other costs, instead of tying it up in one large purchase.

  • Fixed, predictable payments

    One fixed monthly payment covers the asset for the whole term, so you always know exactly what it's costing your business each month, making it straightforward to budget around.

  • Flexible options at the end of your term

    When your finance lease ends, you're not locked into buying the asset outright. Hand it back, extend the lease, or ask the leasing company to sell it and pass on a rebate of the proceeds

How does a finance lease work?

Once you choose the asset your business needs, you apply to a lender for finance to cover its cost. If you're approved, the lender buys the asset from the supplier and leases it to your business for an agreed term, typically between 3 months and 10 years depending on the asset.

You then make fixed monthly payments for the term, covering the asset's cost, interest and the lender's charges. Since you're not paying for it outright, you can start using the vehicle, machine or equipment as soon as the lease begins, rather than waiting until you've saved the cash.

What happens at the end of a finance lease?

You won't automatically own the asset once your finance lease ends. Your options usually include:

  • Extending the lease at a lower secondary rental, sometimes called a peppercorn rental, to keep using the asset

  • Asking the leasing company to sell the asset and pass on a rebate of rentals, commonly around 95% of the sale proceeds, rather than you buying it outright

  • Handing the asset back to the leasing company with nothing further to pay

  • Starting a new finance lease on an upgraded or replacement asset

Which of these your leasing company offers depends on the agreement you sign, so it's worth checking before you commit to a lease over hire purchase.

How much does a finance lease cost?

The monthly cost of a finance lease depends on the asset's price, the term you agree, your deposit and the lender's rate. These figures vary by asset and lender, so treat the table below as a guide to how an agreement is typically structured rather than a quote.

Lease term

Typically 3 months to 10 years, depending on the asset

Monthly payments

Fixed for the whole term, covering the asset's cost, interest and the lender's charges

Deposit

Not always required, though some lenders ask for one or more months upfront

VAT

Reclaimable in line with your business's normal VAT position

End of lease

Extend, hand back, or ask the leasing company to sell it for a rebate of rentals

Ownership

Stays with the leasing company throughout the lease

As an example, a business financing £30,000 of equipment over a 5 year term at a 6% interest rate could expect fixed monthly payments of around £590, totalling around £35,400 over the term. Your own figures will depend on the asset, term and rate your lender offers, so treat this as an illustration rather than a quote.

Which assets can you get with a finance lease?

  • Vehicles

    Cars, vans, trucks and other commercial vehicles.

  • Equipment and machinery

    Tools, industrial or manufacturing machinery, and IT systems.

  • Office furniture

    Desks, chairs and other essentials for a new or growing office.

How does a finance lease compare to other asset finance options?

Finance lease

Contract hire

Hire purchase

Operating lease

Ownership

Only if you take a sale option

Never, asset is returned

Yes, after the final payment

Never, asset is returned

Resale risk

Stays with your business

Stays with the leasing company

Stays with your business

Stays with the leasing company

Balance sheet

Asset and liability recorded from day one

Off balance sheet, though changing from 2026

Asset and liability recorded from day one

Off balance sheet, though changing from 2026

Best suited to

Businesses happy to manage resale value for a lower cost than hire purchase

The lowest monthly cost, mainly vehicles, with no resale value to manage

Businesses that want to own the asset outright

Shorter term needs or assets you upgrade often

What are the advantages and disadvantages of a finance lease?

  • Advantages

    • Get the asset working for your business without a large upfront cost

    • Fixed monthly payments make budgeting straightforward

    • Choose to hand back, extend or take a rebate at the end, rather than being locked into ownership

    • Rental payments can typically be deducted against your profits as a business expense

  • Disadvantages

    • You won't own the asset outright, even after your final payment

    • Your business is committed to payments for the full term, even if your needs change

    • Interest adds to the total cost compared with paying outright

    • Cars with any private use only get partial VAT recovery on the rental

Am I eligible for a finance lease?

Most lenders on the Capitalise panel base a decision on your business and the asset together, so eligibility usually comes down to a mix of the following.

  • Being an actively trading UK business, sole trader, partnership or limited company, usually with at least a few months of trading history

  • A business credit score that shows your business manages its existing obligations well

  • Evidence your business can comfortably afford the monthly payments

  • An asset that falls within the lender's own criteria for age, condition and value

What documents do you need for a finance lease?

Having these ready will speed up your application:

  • Details of the asset you want to lease, including its make, model or specification and value

  • 3 to 6 months of business bank statements

  • Your last set of filed accounts, if you have them

  • Proof of ID for each business owner or director, such as a passport or driving licence

  • Proof of address dated within the last 3 months

How do I apply for a finance lease?

  • Green circle with a white number "1" in the center.

    Tell us what you need

    Let us know the vehicle, machine or equipment you want to lease and how much you're looking to finance.

  • Green circle with white number "2" in the center.

    Complete your application

    Share some details about your business so lenders can assess your application. This uses a soft search, so it won't affect your credit score.

  • Green circle with the white number 3 in the center.

    Get funded

    A dedicated funding specialist takes your application to the finance lease lenders on our panel best suited to your business, and supports you through to completion.

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Ready to apply for a finance lease?

Tell us about the vehicle, machine or equipment you want to lease, and apply for a finance lease through Capitalise.

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