Finance Calculator
Asset Finance Calculator
Estimate monthly repayments for equipment, vehicle, or machinery finance. Include an optional deposit and balloon payment to model different scenarios.
Enter your asset finance details
What is Asset Finance?
Asset finance is a form of business lending used to acquire equipment, vehicles, machinery, or technology. Instead of paying the full cost upfront, the business spreads payments over an agreed term while using the asset from day one.
How is asset finance calculated?
Asset finance repayments are calculated on the net amount financed, which is the asset value minus any deposit paid upfront. If a balloon payment is included, it is treated as a future value that reduces the amount amortised over the term.
The formula adjusts the standard amortisation calculation to account for the balloon:
Where P = amount financed (asset value minus deposit), B = balloon payment, r = monthly interest rate, and n = total number of monthly payments.
Assumptions and caveats
- •Fixed rate assumed for the full term. Variable rates may produce different results.
- •This calculator applies to hire purchase-style structures. Lease or rental arrangements may differ.
- •VAT, documentation fees, and insurance costs are not included.
- •The balloon payment, if included, is due as a lump sum at the end of the term.
- •Results are indicative estimates only.
Worked Example
Scenario
A construction company needs to finance a GBP 85,000 excavator over 5 years at an interest rate of 6.5% per annum.
Calculation
- Monthly Rate = 6.5% / 12 = 0.5417%
- Number of Payments = 5 x 12 = 60
- Monthly Payment = 85,000 x [0.005417 x (1.005417)^60] / [(1.005417)^60 - 1]
- Monthly Payment = GBP 1,664
What This Means
The business would pay approximately GBP 1,664 per month over 60 months, totalling GBP 99,840. The total interest cost is GBP 14,840 over the term. Asset finance preserves working capital by spreading the cost of equipment, and the asset itself serves as security for the facility.
Frequently asked questions
Asset finance is a way of funding the purchase of business equipment, vehicles, or machinery by spreading the cost over a fixed period. Common types include hire purchase, finance lease, and operating lease.
A balloon payment is a larger final payment at the end of the agreement. It reduces monthly repayments during the term but requires a lump sum at the end to complete ownership or settle the agreement.
A deposit reduces the amount financed, which in turn lowers monthly repayments and total interest payable. Typical deposits range from 0% to 20% of the asset value.
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