A director's guide to financing equipment and machinery

Why finance equipment

Machinery and equipment are big, long-lived assets that earn their keep over years. Paying cash upfront ties a large sum into a depreciating asset and drains the working capital your business needs to trade. Asset finance spreads the cost across the equipment's working life, so it effectively pays for itself as it produces — preserving cash for everything else.

Hire purchase — own it in the end

Hire purchase lets you use the equipment from day one, pay in instalments, and own it outright with the final payment. You can claim capital allowances — including, for qualifying assets, the annual investment allowance — and the kit joins your balance sheet. It suits equipment you'll keep for the long haul.

Leasing — use it without owning

A finance lease or operating lease lets you use equipment without buying it, often with predictable payments that are deductible as an expense. You hand it back or renew at the end. This suits kit that dates quickly or that you'd rather replace than own — no residual-value risk on ageing machinery.

Choosing between them

The decision turns on ownership, cash flow and tax. Do you want to own the equipment (HP) or just use it (lease)? Which tax treatment fits — capital allowances on a purchased asset, or deductible lease payments? And how do the monthly costs compare? There's no universal answer; match it to how long you'll use the kit and how you replace it. Compare total costs with the true cost calculator.

Keep it on the company

Asset finance is usually secured on the equipment itself, and should sit on the business, not on you. Credicorp lends to the company, not to you personally, and takes no personal guarantee, so equipping your business doesn't stake your home. See asset finance.