Asset Finance Interest Rates Guide
19th February 2025
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When finding an asset finance provider, one of the key considerations for many of our customers is finding the funder that can offer the most-competitive interest rates.
Asset finance interest rates can vary according to a number of factors, however, including changes between different types of asset finance agreements issued by the same funder.
Discover more about the interest rate for asset finance agreements below and make an informed decision on your borrowing.
What is the interest rate on an asset loan?
Asset finance interest rates are subject to change according to a number of factors, both external and specific to your company. The Bank of England’s base rate dictates the range of interest rates that will be available and this fluctuates fairly regularly.
The asset finance interest rate charged by lenders will almost always exceed the national base rate, which can be found on the Bank of England’s website.
Which factors affect asset finance interest rates?
As well as the Bank Rate, there are a number of other factors that will help dictate the interest associated to your asset finance. Your interest rate will vary depending on the type of loan and whether or not you wish to own the asset at the end of your agreement; hire purchase plans and finance lease plans have varying interest rates.
There are also a number of factors specific to your business and the asset you wish to acquire that will affect your interest rate. These include:
- The type of asset you want to access.
- The resale value of that asset.
- Your business’ credit profile and overall financial health.
- The length of your loan.
Your loan’s interest rates may also differ according to the sector that you operate in. For example, certain sectors, such as farming, construction and manufacturing, may have higher interest rates attached due to the increased risk of the asset becoming damaged.
Fixed vs variable interest rates
Depending on which of our funders you choose to provide your asset finance, you may be able to choose between both fixed-rate and variable-rate asset finance agreements.
Both options have their own associated sets of benefits and drawbacks. Fixed-rate agreements deliver uniform repayments each month, giving your business the opportunity to easily plan, project and budget for the months ahead.
Meanwhile, variable-rate plans typically have lower monthly repayments, but are subject to change in accordance with the condition of the wider economy. This could result in your monthly payments dropping further, but may also result in them increasing.
To decide which option is best for you, discuss with one of our experts today.
Tips for securing a lower interest rate
To secure a lower interest rate on your asset finance agreement, there are options available.
Improve your credit score
Assessing, and actively trying to improve, your business’ financial health in the months leading up to your asset finance application is likely to help you access lower and more competitive interest rates.
Pay a higher deposit
If you are prepared to pay a larger up-front deposit at the beginning of your asset finance agreement, we can typically offer lower monthly interest rates.
Get in touch
The best and most accurate way to find out about the interest rates available to you is by getting in touch!
Our team of financial experts are ready and willing to support your application – or simply enjoy a no-obligation chat about your business’ finances, your goals and the asset you wish to acquire.
Contact us today via email at [email protected] or via phone on 0191 410 4776.
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