Finance Focus
Equipment leasing vs hire purchase: What’s the difference?
There are so many options to acquire new equipment besides buying it outright, which can leave you in a financial dip just to make the purchase. In this column, Jennifer Clay, head of marketing at Shire Leasing has laid out a couple of ideas to explore that may benefit your business.
W
hen a business is looking for new equipment, its main challenge isn’t
finding the right asset. Rather, it’s looking for the most logical way of funding it without putting any more pressure on an already strained cash flow.
Two potential ways of funding it can be found in equipment leasing and hire purchase. Both spread the cost of business equipment but are built around different outcomes.
Leasing, for instance, is usually about accessing assets without ultimately owning them. On the other hand, hire purchase is usually about spreading the cost of the piece of equipment over the term of the agreement with an option of ownership at the end.
Either choice is valid, but the right one depends on how the asset will be used and what businesses want to do once the agreement expires.
| 34 | November 2026
Start with the asset, not the finance product
A useful starting point when looking at equipment leasing vs hire purchase is the equipment a business is looking to procure rather than the flashy headline appeal of either option.
Some assets are central to long-term operations and will continue to generate value either individually or as part of a now more efficient operation well after the finance term has ended.
Other assets may be needed urgently but could soon become unsuitable in a few years’ time. One business investing in a robust piece of manufacturing machinery may value long-term ownership more because the asset will be in situ and remain productive for a long time.
Businesses investing in IT or vehicles may care more about being able to upgrade computers or EVs once their usefulness has expired, or a more efficient model has been released.
The goal is always to look at how long the asset will remain commercially useful.
How equipment leasing usually works
If a business chooses equipment leasing, it will pay regular instalments to use an asset over an agreed term. Ultimately, the asset itself is still owned by the leasing provider. This is a particularly good option for start-up businesses that need to access equipment to scale but don’t have the luxury of large cash reserves. Leasing may also be useful where equipment needs to be updated regularly or when a business wants to reduce exposure to depreciating assets that will have little to no resale value. Once the agreement’s up, a business may be able to return, replace, or upgrade the equipment.
How hire purchase often works In a hire purchase scenario, a business will often pay an initial deposit that’s followed
www.printwearandpromotion.co.uk
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68
