Definition of hire purchase
“Hire purchase is a means of buying an asset (often a large or expensive one) and paying for it over a set period of time through regular monthly instalments, rather than purchasing it outright.”
Whether you need cars, computer equipment or specialist machinery, paying outright for large assets is expensive, and not particularly realistic for most businesses.
Hire purchase agreements – where you pay for an asset over a fixed period of time, often up to 72 months, can relieve the burden on your cashflow, while still offering the business the benefits of using the equipment straight away.
We can offer hire purchase on most business assets, from printing equipment to horseboxes and just about everything in between. So if you need to update your resources without hefty upfront costs, this could be the best option for you.
How does hire purchase work?
A Hire Purchase agreement usually involves paying a deposit and then making regular monthly payments on an item throughout a fixed term – normally between 12 and 72 months.
The finance is secured against the item, and after the last payment is made you will own the asset outright.
Why choose hire purchase?
The biggest benefit of hire purchase is that you can retain a competitive edge, without shelling out huge upfront costs, which is perfect for businesses that rely on high value items to trade effectively
As this form of asset finance is secured against the item you are buying, we are less interested in your trading history or financial past, so hire purchase can be a good choice for young businesses who might not have years’ of accounts or for companies without a perfect credit history.
Unlike lease purchase, with hire purchase you will own the asset outright at the end of the agreement, which is a bonus for many businesses.
There are tax and VAT benefits too – the depreciation of the asset can be written off against taxable profits, and you may be able to claim tax relief on the interest charged for the duration of the agreement.
Hire purchase is the perfect way to ensure your business can compete in a fast-paced marketplace without sacrificing reserves of working capital.
It’s the perfect way to eventually own an asset outright, while paying for it in affordable monthly installments. Some of the solutions we have provided include:
- Hire purchase for printing equipment
- Hire purchase for gym equipment