Equipment finance fees & costs: what to expect (UK) — Get a free quote

Quick summary: Equipment finance has more than just a headline monthly payment. Expect interest or rental costs, VAT treatment, arrangement/documentation fees, possible broker fees, insurance and maintenance charges, early settlement penalties, and residual/balloon sums. UK Business Loans introduces you to lenders and brokers who give clear, written quotes breaking down each cost so you can compare like‑for‑like. Complete a short enquiry — Free Eligibility Check — and get multiple no‑obligation quotes. Free Eligibility Check — Get Quote Now

Why understanding fees matters

Choosing equipment finance isn’t just about the lowest monthly payment. Total cost affects your cashflow, tax position and whether you own the asset at the end. Two deals with similar monthly payments can have very different total amounts payable once arrangement fees, VAT treatment, maintenance and early settlement penalties are included. We introduce you to lenders and brokers who will give you detailed, written cost breakdowns so you can compare offers properly.

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Main fees & costs to expect with equipment finance

Typical fees fall into two groups: ongoing finance costs (interest or rental) and one‑off or ancillary fees. Below are the common items and realistic ranges or examples so you can budget and compare with confidence.

Interest & finance charges

Equipment finance is commonly quoted either as an interest rate (for hire purchase or loans) or as a rental rate (for operating leases). Important distinctions:

• Nominal rate vs APR — APR attempts to include some fees into an annualised rate; check the representative example.
• Fixed vs variable — fixed rate locks monthly costs; variable may track base rates and change payments.
• Margin vs flat rate — some asset finance is quoted as a margin over base rate or as a flat percentage.

Typical ranges (illustrative): 3%–12% annually depending on credit, equipment type and term. Heavy plant or specialist medical equipment may attract different rates.

Upfront (arrangement) fees

Commonly called arrangement, facility or origination fees. These are typically charged as a percentage of the facility or as a flat fee.

• Typical: 0.5%–3% of the financed amount or a flat fee of £250–£2,500.
• When paid: deducted from the facility or added to the balance; confirm how it’s applied.

Documentation, admin & origination fees

Examples include credit search fees, legal/documentation fees, asset valuation and delivery fees.

• Typical single items: £25–£250 (credit/valuation) and up to several hundred pounds for legal fees on complex deals.
• Always ask for itemised lists — “documentation fee” on its own is not enough detail.

Broker fees and commission

Brokers may receive lender commission or charge a client fee. Disclosure is a legal and industry expectation; any fee payable by you should be confirmed in writing.

• Commission-based: broker paid by lender — may still be disclosed as a percentage of the deal.
• Client fees: fixed or percentage (e.g. £500 or 0.5%–1%); must be disclosed before you accept a quote.

Maintenance, servicing and insurance

Full‑service leases include maintenance and sometimes breakdown cover; hire purchase typically leaves maintenance to you. Lenders may insist on all‑risk insurance naming them as interested party.

• Maintenance contracts: £50–£500+ per month depending on equipment.
• Insurance: depends on asset value — shop around and factor into monthly cost.

Early settlement & termination fees

Paying off a hire purchase or terminating a lease early can trigger a charge calculated to compensate the lender for lost interest. Methods vary: fixed percentage, set formula or “windfall” compensation under consumer rules (for business it’s contractual).

Typical: several months’ interest or a percentage of remaining balance — always request an early settlement figure in writing.

Residual value and balloon payments

Operational leases commonly carry a residual (guaranteed or estimated). HP deals may include balloon payments to reduce monthly costs.

Implication: larger residual/balloon = lower monthly payments but a larger outlay at the end or re‑finance requirement.

VAT treatment

VAT can be payable on rentals and on the purchase element depending on the product and whether you can reclaim VAT. Rentals are usually subject to VAT at point of invoice, which affects your cashflow.

Fee type | Typical range / example | When paid | Who pays

For more on product types and whether leasing or hire purchase suits your needs, see our asset finance overview and how our matching process works — compare asset finance options.

How lenders & brokers will disclose fees

Good disclosure follows a simple sequence: initial indicative quote → detailed written quote/rep example → pre‑contract information / contract showing total amount payable. Expect:

• a representative example or APR where applicable;
• an itemised fee list (arrangement, documentation, valuation, broker client fee if charged);
• VAT treatment and insurance requirements;
• early repayment calculations and residual/balloon explanation;
• a full finance schedule showing dates, amounts and total payable.

Timing: you should receive clear written costs before committing. If anything is missing or unclear, ask the broker or lender to reissue a corrected quote.

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How UK Business Loans helps you compare and get clear fee disclosures

Our role is to introduce your enquiry to lenders and brokers who can meet your needs for equipment finance (we typically support requests for £10,000 and above). Our simple process:

1. Complete a short enquiry form (two minutes).
2. We match you with specialist lenders/brokers based on sector and deal size.
3. You receive written, no‑obligation quotes with itemised fees and payment schedules.
4. Compare offers side‑by‑side and proceed with the provider you choose.

We do not charge you for introductions. The enquiry is for matching only and is not a formal application. Submitting it will not affect your credit score. Start Your Enquiry

Practical tips to reduce or manage equipment finance fees

• Compare multiple quotes — small differences in arrangement fees or margin compound over the term.
• Negotiate arrangement fees or ask for them to be absorbed into the rate.
• Improve the business credit profile before formal application to secure better margins.
• Consider longer terms or a modest balloon/residual to reduce monthly cost (but check total payable).
• Bundle maintenance or insurance only if cost‑effective — sometimes separate procurement is cheaper.
• Buy used equipment if appropriate — lower capital reduces fees.

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Quick checklist before you sign

• Do I have an itemised quote showing interest, fees, VAT and insurance?
• Is the total amount payable and payment schedule clear?
• Are early settlement terms and any penalties explained?
• Who owns the asset at the end of the term?
• Do I understand maintenance and insurance obligations?
• Is there a broker/client fee and has it been disclosed?

Frequently asked questions

Will the quote include all fees?

Yes — lenders and brokers should provide a written quote listing the interest/rental, any upfront fees, VAT treatment, insurance and early repayment terms before you agree to proceed.

Do brokers charge me?

Some brokers charge client fees; others are paid by the lender. Any fee payable by you must be disclosed in writing up front.

Will my enquiry affect my credit score?

No. Submitting an enquiry via UK Business Loans is not a formal application and does not affect your business credit score. Lenders may perform checks later if you proceed to an application.

Can I repay early?

Usually yes. Early repayment figures should be provided by the lender and set out in the contract — check the calculation method before you sign.

Get clear, written quotes — Free Eligibility Check

Don’t sign until you have comparable, written quotes. Complete our short enquiry and we’ll match you with specialist lenders and brokers who will send clear, no‑obligation quotes and breakdowns so you can decide with confidence. Get Quote Now — Free Eligibility Check

Useful links: asset finance · business loans · how it works · about us · privacy policy · terms

For a deeper guide to equipment finance products and costs, see our dedicated equipment finance page on equipment finance.

Legal & compliance

UK Business Loans is an introducer; we do not lend or provide regulated financial advice. We connect your enquiry to lenders and brokers who will provide the finance offers. All terms, conditions, fees and eligibility are confirmed by the provider in writing. Links to third‑party regulatory guidance and VAT rules are recommended when comparing offers.

Hero image suggestion: alt=”Construction excavator financed by equipment hire purchase – UK Business Loans”. Consider adding an infographic showing fee breakdown (interest vs fees vs VAT vs insurance) to improve clarity.

equipment finance

1. How much does equipment finance typically cost in the UK?
Typical equipment finance costs vary but commonly include interest or rental rates of around 3%–12% p.a. plus arrangement, documentation, insurance and possible broker fees, all of which affect total payable.

2. Will the written quote I receive include every fee and the total amount payable?
Yes — reputable lenders and brokers provide a written quote or representative example showing interest/rental, arrangement/documentation fees, VAT treatment, insurance requirements and early settlement terms before you sign.

3. Does submitting an enquiry through UK Business Loans affect my business credit score?
No — completing our enquiry is not a formal application and won’t affect your credit score, though lenders may carry out credit checks later if you proceed.

4. What is an arrangement (origination) fee and how much should I expect to pay?
An arrangement fee is an upfront charge for setting up the facility, typically 0.5%–3% of the financed amount or a flat fee of about £250–£2,500, and it may be deducted from or added to the balance.

5. Do brokers charge fees to my business and how will I know?
Some brokers charge a client fee while others receive commission from the lender, and any fee payable by you must be disclosed in writing before you accept an offer.

6. Can I repay equipment finance early and will there be an early repayment charge?
You can usually settle early but lenders often apply early settlement or termination charges, so request a written early settlement figure and the calculation method before signing.

7. How is VAT treated on equipment finance and does it affect cashflow?
VAT is typically payable on rentals or the purchase element at the point of invoice, which can affect cashflow, though VAT reclaimability depends on your business VAT status and the product type.

8. Should I choose lease (operating/finance) or hire purchase (HP) for equipment ownership and costs?
Hire purchase usually leads to eventual ownership and is quoted with interest, while leases can keep assets off the balance sheet with residuals and maintenance options, so compare itemised quotes to see which is cheaper overall for your needs.

9. What practical steps can I take to reduce equipment finance fees?
Compare multiple written quotes, negotiate or ask for arrangement fees to be absorbed into the rate, improve your business credit beforehand, and consider term length or a modest balloon/residual to lower monthly payments while checking total payable.

10. How does UK Business Loans help me get clear, comparable equipment finance quotes?
We introduce your enquiry to specialist, vetted UK lenders and brokers who send itemised, no‑obligation written quotes so you can compare fees, VAT treatment and payment schedules — our matching service is free and not a loan application.