Can I refinance hire purchase or lease agreements mid-term?

Often yes, but you must obtain a settlement figure from your existing lender. Some hire purchase agreements retain title with the lender until final payment, which may require settlement or lender consent before refinancing. Leases may have restrictions or break costs, so review your contract carefully.

Will refinancing harm my business credit score?

Refinancing can affect your credit depending on whether a new credit application is made and how existing obligations are settled. Lenders may perform hard credit searches which can impact your score briefly. Discuss lender search policies and consider using a broker who can carry out soft checks first.

How do I know if refinancing saves money?

Calculate the total cost of the current agreement including remaining interest and any early settlement fees, then compare with the total cost of the new facility including fees and interest. Factor in tax and accounting effects, and model cash flow to see whether monthly savings or overall cost reductions occur.

Can I refinance equipment or machinery that is partway through finance?

Short answer — yes, but it depends

You can often refinance equipment or machinery that is partway through a finance agreement, but eligibility and benefits depend on the type of finance, the lender’s terms, and the asset’s ownership status. Early settlement charges, outstanding balance, and the agreement type (hire purchase, lease, asset finance) influence whether refinancing is practical and cost-effective. Start by checking your current contract and talking to potential refinance providers to compare actual costs and savings.

What “partway through finance” actually means

“Partway through” means you’re still making payments under an existing agreement and the contract term hasn’t ended. That can include hire purchase, conditional sale, operating lease, finance lease, or invoice-backed asset finance. Each contract type creates different rights and obligations that affect refinancing options.

Who owns the equipment?

Ownership determines options: if a lender retains title until the final payment (typical in hire purchase), you may need lender consent to refinance. For finance leases the lessor usually retains ownership, so early refinancing may require settlement or novation. If you already own the asset outright, refinancing is usually straightforward because no third-party consent is necessary.

How refinancing equipment mid-term works

Common refinancing routes

Businesses refinance equipment by settling the existing agreement and replacing it with a new facility that has better terms or different structure. Alternatives include refinancing through a new lender, refinancing via a broker, or restructuring the existing facility with the same lender. Each route may reduce monthly costs, extend terms, or free up capital for other uses.

Early settlement and payoff figures

To refinance you typically need a settlement figure from your current lender showing the amount outstanding plus any early termination fees. Lenders calculate settlement differently, so obtain a formal payoff figure in writing. That figure determines how much new finance you need and whether refinancing saves money after fees.

Eligibility: what lenders look for when you refinance

Key underwriting factors

Lenders assess the asset’s age, condition, and residual value when refinancing mid-term. They also evaluate your business credit profile, trading history, cash flow, and sector risk. Strong cash flow and clear maintenance records improve your chances of favourable refinance terms.

Contractual and legal checks

Lenders will check whether the existing agreement allows transfer, requires novation, or imposes restrictions on resale or refinancing. Some contracts include restriction clauses that hinder refinancing or require the original lender’s permission. If the contract cannot be novated, you may need to settle the old debt first.

Sectors and assets where refinancing is easier

Refinancing is commonly available for commercial vehicles, plant machinery, manufacturing equipment, and medical devices with predictable values. Specialist or highly bespoke machinery can be harder to refinance because market resale values are less clear. Lenders also prefer assets with active secondary markets.

Benefits and risks of refinancing equipment mid-contract

Potential benefits

Lower monthly payments or interest rates, improving cash flow.
Freeing equity in assets to reinvest in the business.
Consolidating multiple agreements into a single facility for administrative simplicity.

Key risks and costs

Refinancing can trigger early termination charges, administration fees, or higher total interest if the new term is longer. There is also a risk of losing favourable tax or accounting treatment tied to the original agreement. Always model total cost over the full remaining term including fees before deciding.

Compliance and transparency

Best Business Loans is an independent introducer and does not provide finance directly. We aim to be clear and not misleading and encourage users to seek full terms and a settlement figure from their current lender before acting. If you’re unsure about financial or tax consequences, obtain independent financial or accounting advice.

How to refinance equipment mid-term: practical steps

Step 1 — Gather information

Collect your current finance agreement, a written settlement figure, maintenance records, and asset photos. Prepare business documents such as bank statements, management accounts, and proof of trading history. Having these ready speeds lender decisions and produces more accurate quotes.

Step 2 — Compare options and quotes

Approach multiple lenders or use an introducer or broker to survey the market and compare offers. When comparing, look at the total cost of finance, fees, term length, balloon payments, and covenants. Don’t judge solely on headline rate — factor in settlement costs and any tax or accounting impacts.

Step 3 — Use expert matching to save time

Best Business Loans helps match UK businesses to lenders and brokers that specialise in asset and equipment refinance. We don’t lend ourselves; we introduce you to relevant providers based on your asset, sector and business profile. For a tailored route to refinance, start with a Quick Quote or visit our refinance overview at https://bestbusinessloans.ai/loan/refinance/ to be matched efficiently.

Step 4 — Complete due diligence and settle

Once you accept an offer, lenders will perform valuations and legal checks before issuing documents. You may need to instruct solicitors to handle settlement with your existing lender and register any changes to security. After settlement, the new finance agreement replaces the old one and your new payment schedule begins.

When refinancing isn’t the best choice

If early settlement penalties and new fees outweigh projected savings, refinancing may not be sensible. If refinancing risks breaching covenants or worsens tax/ accounting outcomes, consider alternatives like renegotiating your current deal or extending terms with your existing lender. A clear cost-benefit model will reveal the right option.

Key takeaways

Yes — refinancing equipment partway through finance is generally possible, but it depends on contract terms, asset ownership, and the balance of settlement costs versus savings. Gather a formal payoff figure, compare total costs, and check any contractual restrictions before proceeding. Use an introducer like Best Business Loans to match you with lenders and brokers and to obtain quotes quickly. If unsure, get independent financial or tax advice to confirm the commercial and accounting impact.

Ready to check your options?

If you want a quick eligibility check and tailored introductions to lenders or brokers, complete our Quick Quote. It takes a couple of minutes, is free, and helps us match you to appropriate providers who handle equipment refinance. Start with a Quick Quote today to understand potential savings and next steps.

Author and credibility

Best Business Loans Editorial Team — combined experience supporting UK SMEs with asset finance and commercial lending introductions. We operate as an independent introducer and do not provide credit or financial advice. For regulated advice, contact an FCA-authorised adviser.