Hire Purchase

A Hire Purchase Agreement usually requires the customer to pay an initial deposit, with the remainder of the balance, plus interest, paid over an agreed period of time. The finance company purchases the asset on behalf of the customer and owns the asset until the final instalment and option fee is paid. The funding is on balance sheet.

Hire Purchase Benefits

• Eventual ownership – the asset is yours at the end of the agreement
• Fixed monthly payment – makes for easy budgeting
• Fixed or variable interest options – You decide
• Tax advantages – normally you can claim writing-down allowances and perhaps capital grants, while repayment interest may be offset against profits and VAT is usually reclaimable (special rules apply to cars)
• Flexible terms – Deposit, repayment period and occasionally a balloon payment is included to reduce the monthly instalments

Assets you can finance with hire purchase

• Cars and Vans
• HGVs
• Busses and Coaches
• Agricultural equipment
• Construction Equipment
• IT and communications technology