top of page
industry worker

Lease Finance

Call now on

0330 133 3713

Lease Finance

What is lease finance?

A finance lease or sometimes known as a capital lease is where the client (lessee) rents an asset/equipment for the duration of the asset’s lifespan.

Finance leases explained

The key feature to finance leases is that ultimately the risk and reward of owning equipment this way belongs to the client. Maintenance costs may well increase over the term however the asset or equipment in question will never be fully owned by the client.

A finance lease is defined in Statement of Standard Accounting Practice 21 as a lease that transfers

“substantially all of the risks and rewards of ownership of the asset to the lessee”.

Basically, this means that the lessee is in a broadly similar position as if they had bought the asset.

In a practical sense, a finance lease seems like hire purchase, however, it is calculated differently on a balance sheet. At Two Finance, we can assist you in providing insightful knowledge on the various options available to you and your business. In addition to this our extensive history in merchant banking, we can confidently offer you a solution tailored to your business.

How do finance leases work?

Finance leases are based on a fixed term agreed at the time of application. The monthly payments will be calculated by the cost of the asset plus interest.

What happens at the end of the agreement?

Once the fixed term is ending, there are three options available;

  • Keep the asset on a secondary lease term. Usually at a reduced cost

  • Sell the asset and keep any equity from the sale less the final payment

  • Return the asset to the leasing company.

Which is better, Finance lease or hire purchase?

For many businesses, the choice between a hire purchase or a finance lease usually comes down to one of accounting and financials. The significant benefit of Finance lease is the cost of VAT can be spread across the monthly payments of the asset. With hire purchase, the VAT is required to be paid at the time of purchase. On larger assets, the VAT can be considerable, potentially affecting the working capital.

Some businesses chose to hire purchase as the asset can be shown on their balance sheet. Other businesses prefer to show the asset as an operating cost and offset the monthly payments against their profit and loss. There are tax advantages for both options. SSAP 21 and IAS 17 respectively.

Is my business eligible for finance lease?

Available to Limited Companies, PLC’s, sole traders, partnerships and LLP’s in the UK. Eligible bodies include; registered charities, local authorities, clubs, associations and societies. All business based in the UK including new businesses.

Terms and limits

Minimum facility size £5,000

Maximum facility size £2,000,000

Up to 100% of asset cost funded

Terms ranging from 1 to 7 years plus with the option to buy the asset

To discuss your options with one of our dedicated account managers, call our team today on 0330 133 3713 or email us at

The Finance Process


Speak / Email one of our Account Managers


We establish what your business needs and wants including finance or equipment you wish to obtain


Our lending underwriters listen to us. We submit a proposal on your business


Documents signed online. Faster payout where needed

The Next Step


Request a call back

One of our dedicated Account Managers will contact you to discuss your requirements

Call us Now

To speak with a dedicated Two Finance Account Manager, call our dedicated line now

Email us

Prefer Email? Email us today for a prompt response

bottom of page