Key points
- Asset finance is usually cheaper for single equipment purchases
- Term loans give total flexibility on how you spend the cash
- Tax treatment differs — talk to your accountant before signing
- Match the loan term to the useful life of what you're buying
Asset finance
Hire purchase or lease structures secured on the asset itself. Cheaper rates because the lender has recourse to the equipment, and the balance sheet treatment can be favourable.
Term loans
Unsecured or lightly secured cash you can spend on anything. Slightly higher rates, but total flexibility on how the money is used.
Tax treatment
Hire purchase lets you claim capital allowances on the asset. Operating leases keep the asset off your balance sheet and are treated as an operating cost.
Choosing between them
For a single big-ticket item, asset finance is usually cheaper. For mixed spend across kit, working capital and hiring, a term loan is simpler.
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