This models a standard hire purchase structure. Some asset finance products (finance lease, operating lease) work differently — you may not own the asset at the end, and VAT treatment can vary. Check which structure your agreement actually uses before comparing quotes with this tool.
Asset finance lets a business spread the cost of equipment, vehicles or machinery instead of paying the full price upfront, using the asset itself as security for the loan. A common structure is hire purchase: you pay a deposit, then fixed monthly instalments, and own the asset outright once the final payment clears — sometimes with a larger 'balloon' payment at the end that lowers the monthly cost in exchange for a lump sum due later.
This calculator works out your monthly payment from the equipment cost, deposit, APR and term, with an optional balloon payment if your deal includes one. It's the same amortisation maths used for a standard business loan, just applied to an asset-backed structure.
With hire purchase you own the asset once you've made all the payments. A finance lease is more like a long-term rental — you pay to use the asset but the finance company retains ownership, which changes both the accounting treatment and what happens at the end of the term.
A balloon payment lowers your monthly cost by pushing part of the asset's value to the end of the term. It suits businesses expecting cash flow to improve later, or planning to refinance or sell the asset before the balloon falls due — but it means a lump sum obligation you need to plan for.
Capital allowances on the asset are generally based on the full purchase cost, not just what you've financed, but the exact treatment depends on the finance structure — check with an accountant before assuming standard capital allowances apply.