Asset Finance Rates 2026 — Updated August 2026
- HP (hire purchase) rate range
- 5.5%–9.5% APRHP (hire purchase) rate range
- Finance lease rate range
- 5.0%–8.5% APRFinance lease rate range
- Some variable rate products
- BoE base + marginSome variable rate products
- Last updated
- August 2026Last updated
Asset finance rates in 2026 range from 5.5% to 9.5% APR for hire purchase (HP) and 5.0%–8.5% for finance leases, depending on the asset type, business credit profile, loan size, and term. The choice of finance structure — HP, finance lease, or operating lease — affects not just the rate but the accounting treatment and ownership at the end of the term. This guide covers rates and structure for plant and machinery, vehicles, technology, and general business equipment.
Asset Finance Rates by Asset Type and Structure — August 2026
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| Asset type | HP rate range | Finance lease rate | Notes |
|---|---|---|---|
| Commercial vehicles (HGV, plant) | 5.5%–7.5% | 5.0%–7.0% | Strong secondary market. Most fundable asset category. Wide lender choice. |
| Construction / yellow plant | 5.5%–8.0% | 5.0%–7.5% | CAT, JCB, Volvo — well-understood by specialist lenders. Age matters significantly. |
| Manufacturing machinery (CNC, industrial) | 6.0%–8.5% | 5.5%–8.0% | Rates depend heavily on the asset's secondary market liquidity and specialist vs general use. |
| Agricultural machinery | 5.5%–7.5% | 5.0%–7.0% | Tractors, combine harvesters — well-understood. Seasonal income assessment common. |
| Technology / IT (servers, AV, print) | 6.5%–9.5% | 6.0%–8.5% | Rapid depreciation. Short terms (2–4 years). Operating lease often more appropriate. |
| Vehicles (cars, vans — business fleet) | 5.5%–7.5% | 5.0%–7.0% | Fleet finance at competitive rates. VAT considerations for commercial vehicles. |
| Medical / dental equipment | 5.5%–7.5% | 5.0%–7.0% | Healthcare sector — strong lender appetite. Long terms (5–7yr) available. |
| Renewable energy (solar, EV charging) | 5.0%–7.5% | 4.5%–7.0% | Growing specialist market. Government-backed schemes available for some assets. |
What determines your rate
Asset type and secondary market
Assets with strong, liquid secondary markets (commercial vehicles, agricultural machinery, standard CNC machines) attract the best rates because lenders can repossess and sell efficiently if needed. Bespoke or single-purpose machinery with no resale market is more expensive to finance — and some lenders decline.
Asset age
New or near-new assets attract the best rates. Used assets are fundable but rates increase with age — typically above 10 years old, lenders become more selective and rates step up.
Business credit profile
Established businesses with 3+ years of accounts, clean credit, and strong trading history access the best rates. Start-ups and businesses with adverse credit require specialist lenders at higher rates, or security (personal guarantee, property charge).
Loan size
Larger facilities (above £500,000) attract more lender competition and better rates. Below £25,000, the market is dominated by point-of-sale finance with standard (higher) rates.
Structure — HP vs lease vs operating lease
HP involves ownership at the end — capital allowances apply. Finance lease keeps the asset off-balance-sheet (under IFRS 16 it is on-balance-sheet, but for SMEs using UK GAAP, operating lease treatment may remain available). Operating lease allows the latest equipment refresh without ownership. The right structure depends on the business's tax position, accounting treatment goals, and whether ownership of the asset matters.
Worked cost example
Comparison: £150,000 CNC machining centre. HP vs Finance Lease. 5-year term.
HP at 6.5% APR: Monthly payment £2,923 (capital + interest). Own asset at term end.
Total repaid: £175,380. Total interest: £25,380.
VAT: £30,000 payable upfront on HP (recoverable if VAT-registered).
Finance lease at 6.0%: Monthly rental £2,899 (interest-only-style, possible balloon at end).
No ownership at term end (unless secondary market purchase option exercised).
VAT: charged monthly on lease payments (recoverable if VAT-registered).
Finance lease is better if: cash flow is the priority and ownership is not essential.
Rate context and outlook
Asset finance rates in 2026 have stabilised after rising in 2023–2024 tracking the base rate increases. The BoE base rate at 3.75% (July 2026) is lower than the 2023 peak (5.25%), which has gradually reduced funding costs for asset finance lenders. Construction, agricultural, and commercial vehicle asset finance have the strongest lender appetite in 2026. Technology asset finance continues to evolve — operating lease structures for technology assets have grown significantly as businesses seek to refresh equipment on shorter cycles without balance sheet commitment.
Frequently asked questions
What is the difference between HP and finance lease for asset finance?
With hire purchase (HP), you own the asset outright at the end of the agreement — you are buying it on deferred payment terms. With a finance lease, the lessor (finance company) retains ownership and you have use of the asset during the lease term. At the end, you typically have an option to extend the lease at a peppercorn rental or purchase at market value. HP suits businesses wanting ownership and capital allowances. Finance lease suits businesses where cash flow and avoiding large upfront costs matter more than ownership.
Can I get asset finance for used equipment?
Yes — used equipment finance is widely available for most asset types. The age, condition, and secondary market of the specific asset are the key factors. Used commercial vehicles, agricultural machinery, and construction plant are financed regularly at competitive rates. Very old or bespoke equipment may require a specialist lender or attract higher rates.
What is the minimum deposit for asset finance?
Many asset finance products require no deposit — particularly for new assets financed by established businesses with clean credit. The monthly payments cover both capital and interest over the term. For businesses with thinner credit profiles or for older assets, lenders may require a deposit of 10%–20% to reduce the LTV.
Is interest on asset finance tax deductible?
Yes — interest payments on asset finance (HP or lease) are deductible against business profits for corporation or income tax purposes. With HP, the business also claims capital allowances on the asset (Annual Investment Allowance up to £1m). With a finance lease, the rental payments (including the capital element) are deductible, but capital allowances are claimed by the lessor, not the lessee. Take specific tax advice for your structure.
Can a start-up get asset finance?
Start-up asset finance is available but typically requires either personal guarantees from the directors, a deposit (20%–30%), or a combination of both. Some specialist start-up asset finance lenders assess the individual director's credit profile alongside the limited trading history. Established equipment dealers sometimes offer point-of-sale finance to start-ups at competitive rates for new equipment purchases.
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Independent whole-of-market advice · FCA No. 814533