Hire Purchase

Hire Purchase is an agreement to hire an asset for a specified period with option to purchase at the end of the contract period and can be a regulated or non-regulated contract.

Using a Hire Purchase agreement can help keep your working capital intact. You can choose and use the goods but pay in instalments tailored to your business cash flow.

Hire Purchase, arranged by Business Finance Brokers Ltd, offers a number of benefits including:

  • Hire Purchase (also known as HP) is suitable for equipment you wish to own and may have a useful life beyond the finance agreement term.
  • Hire Purchase allows you to get the equipment straight away but to spread the payments over the life of the equipment, and it allows you to keep the asset at the end of the repayment term for a nominal fee.
  • Hire Purchase can be a tax-efficient way to buy equipment, as the interest on the payments is tax deductible and capital allowances on the equipment can be claimed immediately.
  • VAT on the equipment cost is payable by you up front (as a deposit) in full.

With Hire Purchase, you must be aware that:

  • You will not own the equipment until all the required payments have been made, including the option to purchase fee which is payable with the final rental and any other conditions have been satisfied;
  • If you default on your payments your equipment can be repossessed without a court order, unless you have paid a third or more of the total amount payable; (CONC).
  • If you default on your payments you must pay expenses and legal costs for the lender to enforce contractual arrangements.
  • Contracts require the end user to maintain and use the asset in accordance with the manufacturer’s recommendation. The Asset must be fully insured.