There are two main forms of asset finance:

• Leasing – renting it over a period in return for fixed rental payments.
• Hire purchase arrangements – an initial deposit is paid towards the cost of the asset and the balance is then paid in instalments over a period of time. At the end of the hire purchase period, you would make a final payment and gain ownership of the asset.

You should think about leasing or renting equipment that has high maintenance costs, can quickly become outdated, or is only used occasionally.

There are several advantages of leasing or renting equipment:

• you don’t have to pay the full cost of the asset up front, so you don’t use up your cash or have to borrow money
• you have access to a higher standard of equipment, which might be too expensive for you to buy outright
• you pay for the asset over the fixed period of time that you use it, which helps you budget for the future
• as interest rates on monthly rental costs are usually fixed, it is easier to forecast cashflow
• you can spread the cost over a longer period of time and match payments to your income
• the business can usually deduct the full cost of lease rentals from taxable income
• if you have not bought the asset outright, you won’t have to worry about any overdraft or other loan taken out to finance the purchase being withdrawn at short notice, forcing early repayment