Asset Finance & Hire Purchase Calculator
Calculate monthly payments and true cost for hire purchase and finance lease agreements. See whether your rate is competitive.
By LoanLens · Updated February 2026
Flat rate vs APR
Many asset finance providers quote a flat rate rather than an APR. A flat rate is calculated on the original balance throughout the entire term — it does not reduce as you pay down the principal. This makes it look cheaper than it is.
A flat rate of 4% over 48 months is roughly equivalent to an APR of around 7.5–8%. The conversion depends on the term and principal, which is why this calculator does the maths for you.
Typical asset finance rates
| Rate quality | APR range |
|---|---|
| Excellent (strong credit, large ticket) | 5–7% |
| Good (typical SME) | 7–10% |
| Average | 10–13% |
| Below average / higher risk | 13–20%+ |
Rates vary by asset type, lender, business credit profile, and term length. Source: Finance & Leasing Association / British Business Bank 2024.
HP vs Finance Lease
You own the asset at the end of the agreement after paying an optional balloon payment. The asset appears on your balance sheet from day one. You can claim capital allowances. Suitable when you want to own the equipment long-term.
You use the asset but the finance company retains ownership. Rentals are typically 100% tax-deductible as a business expense. At the end of the term you can extend the lease, return the asset, or in some cases facilitate a sale. Useful when you need the asset but not ownership.
Related
Frequently asked questions
Does a balloon payment reduce my monthly payments?
Yes. A balloon payment defers a lump sum to the end of the agreement, which reduces your monthly payments during the term. However, you will need to pay or refinance the balloon at the end — and the total interest paid is typically higher because you are carrying a larger balance for longer.
Can I get asset finance for used equipment?
Yes, most lenders will finance used assets, though the LTV (loan-to-value) and rate may differ. The asset's age, condition, and resale value all affect lender appetite. Specialist asset finance brokers can often access lenders who focus on specific asset types.
What is a good APR for asset finance in 2026?
For a well-established SME with good credit, 7–10% APR is considered competitive for HP or finance lease on most asset types. Rates below 7% are achievable for larger transactions or assets with strong residual values (e.g. commercial vehicles). Above 13% may indicate you should shop around.
LoanLens provides information and educational tools, not regulated financial advice. We are not authorised or regulated by the Financial Conduct Authority. Calculator results are estimates based on the information you provide and typical market data. Always seek independent professional advice before making financial decisions.
Hire purchase vs. finance lease — what's the difference?
Both are forms of asset finance, but they work differently at the end of the agreement:
- Hire purchase (HP): You pay in monthly instalments and own the asset outright at the end of the term (usually after a nominal option-to-purchase fee). The asset appears on your balance sheet from the start — you can claim capital allowances and depreciation.
- Finance lease: The lender retains legal ownership throughout. You make monthly payments and use the asset, but at the end you typically either extend the lease, return the asset, or arrange a sale and take a share of the proceeds. Does not appear as an owned asset on your balance sheet.
How this calculator works
Enter the asset cost, your deposit, the annual interest rate (APR), and the agreement term. The calculator shows your monthly payment using a standard amortisation formula, the total amount payable, and the total finance charge (interest cost) over the full term.
If your agreement includes a balloon payment — a lump sum due at the end that represents the asset's residual value — enter this separately. The calculator adjusts the monthly payment calculation accordingly, meaning you pay less each month but have a larger liability at the end.
Are your asset finance rates competitive?
Asset finance APRs in the UK typically range from 5% to 15%+ depending on the asset type, term, your business credit profile, and whether the agreement is secured on the asset alone. Vehicle hire purchase tends to attract the most competitive rates; specialist equipment and technology can be higher. If you took out your agreement more than 2–3 years ago, a review may reveal that you could access better terms today.