What is the difference between asset refinance and sale and leaseback?

These two get used interchangeably across the market, including by some lenders. They are not the same thing, and the difference shows up in places that matter.

What actually changes

Under a refinance, you keep legal title. The asset stays yours and appears on your balance sheet as before. The lender protects itself by registering a charge over it, usually at Companies House. If you repay as agreed, the charge is removed and nothing about your ownership has changed.

Under a sale and leaseback, title passes. The lender buys the asset from you at an agreed value and leases it back. You still use it every day, but you no longer own it. You are now a lessee of equipment that used to be yours.

Why it matters

Your accounts. Whether an asset stays on your balance sheet, and how the payments are treated, differs between the two. Your accountant will want to know which structure you have taken, so ask before signing rather than after.

The end of the term. Under a refinance the asset is simply yours, unencumbered, once the facility clears. Under a sale and leaseback, what happens next depends on the agreement. There may be an option to buy it back, it may return to the lender, or the lease may continue. This is the point people most often assume rather than check.

How much you can release. A sale and leaseback can sometimes release more cash, because the lender is buying outright rather than lending against security. That is the trade for giving up ownership.

The question to ask

When a lender offers you “asset refinance”, ask directly: do I still own the asset, or are you buying it?

It is a short question and the answer tells you which product you are actually being sold. If the paperwork says sale, purchase price and lease, it is a sale and leaseback whatever the covering email called it.

Which is better?

Neither, inherently. A refinance is cleaner if you want to keep ownership and the amount released is enough. A sale and leaseback may suit if you need to release more and are comfortable giving up title.

What matters is knowing which one you are signing. We set out the structure each lender is offering alongside the rate, because the monthly payment is only half the picture.