Hire Purchase

What is Hire Purchase

Hire Purchase is a type of asset finance that allows firms or individuals to possess and control an asset during an agreed term, while paying rent or instalments covering depreciation of the asset, and interest to cover capital cost. At the end of the term, they have the option to purchase the asset outright.

It lets businesses spread the cost of their investment over the life of the asset, making it easier to budget. Hire Purchase is particularly suitable for acquiring vehicles, machinery, construction, and commercial equipment.

Products and services are subject to eligibility, status, terms and conditions and availability. All lending is subject to status and our lending criteria. The right to decline any application is reserved.

Benefits of Hire Purchase

More time to repay: Spreading the cost over the life of the asset means the initial outlay can be lower, allowing the business to budget effectively with manageable fixed monthly payments
Seasonality: We understand that seasonal fluctuations can have an impact on cash flow, so we can tailor monthly repayments to take this into account. For example: an imbalance in the timing of sales revenue for a given class of manufactured product
Keep control: Hire Purchase allows the business to maintain control as they have full use of the asset throughout the repayment period and can normally claim capital allowances. Capital allowances are a type of tax relief that businesses can claim when they spend money on long-term assets for use in the business. They let them deduct some or all of the value of the asset from their taxable profit
Tax efficient: Financing asset purchases can be more tax efficient than standard-term loans due to lease payments being booked as expenses. Although asset depreciation also provides tax benefits, the useable lifetime of the asset will vary depending on the asset and on local regulation
Reclaim VAT (if they are VAT registered): For more information on VAT registration, please visit gov.uk/vat-registration/overview

Finance is secured against the asset and/or equipment. If the business is unable to keep up with payments we may repossess the asset and/or equipment.