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Key Features of Hire Purchase:

  1. Low Initial Outlay: A small deposit (typically 10-20% of the asset value) is required upfront.
  2. Fixed Monthly Payments: Predictable instalments make budgeting easier.
  3. Ownership at the End: You own the asset outright after the final payment, including any option to purchase fee.
  4. Secured Against the Asset: The asset itself acts as collateral, reducing the need for additional security.
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Benefits of Hire Purchase:

  • Preserves Cash Flow: Spread the cost over time while using the asset.
  • Tax Efficiency: Businesses may claim capital allowances and offset interest payments against taxable profits.
  • Flexibility: Payment terms range from 12 to 84 months, tailored to your financial needs.
  • Access to High Value Assets: Finance expensive equipment or vehicles without paying the full cost up front.

Ideal For:

  • Businesses looking to invest in long term assets.
  • Individuals wanting to own assets without a large up front payment.
  • Companies seeking predictable repayments and eventual ownership.

Hire Purchase is a reliable and straightforward way to finance essential assets while maintaining financial stability and future ownership security.

Small business owners

Advantages of financing an asset through a hire purchase agreement

Hire Purchase agreements offer a flexible, predictable, and cost-effective way to finance assets, providing immediate use, ownership, and potential tax benefits. This method of financing is particularly attractive for businesses looking to preserve working capital while acquiring critical assets for growth.

01

Ownership at the end of the term

The borrower gains full ownership of the asset once all payments, including the final option-to-purchase fee, are made. This is ideal for businesses that prefer to build equity in their assets.

02

Fixed monthly payments

Payments are agreed upon at the start and remain fixed throughout the term, making it easier to budget and manage cash flow.

03

Flexible deposit options

Hire purchase agreements often allow for tailored deposits, enabling the borrower to adjust upfront costs based on their financial situation.

04

Use of the asset from the start

The borrower has full use of the asset as soon as the agreement is signed, even though ownership is transferred only after the final payment.

05

Tax benefits

Businesses can claim capital allowances on the asset and potentially deduct interest payments as a business expense, reducing taxable profits.

06

No need for a lump-sum payment

HP allows businesses to acquire essential equipment or vehicles without the need for a large upfront investment, preserving working capital for other needs.

07

Lower risk of obsolescence

While the borrower eventually owns the asset, the staged payments reduce the financial risk if the asset becomes obsolete during the repayment period.

08

Improved cash flow management

Spreading the cost of the asset over time helps businesses maintain liquidity and invest in other growth opportunities.

09

Competitive interest rates

HP agreements often come with competitive interest rates, especially if the borrower has a strong credit history.

10

Easier approval process

Compared to unsecured loans, HP agreements are easier to secure since the asset acts as collateral, reducing the lender’s risk.

11

Protection against inflation

Fixed payments shield borrowers from rising costs over the term of the agreement, which can be particularly beneficial in times of economic uncertainty.

12

Builds business credit

Consistently making HP payments on time can improve the borrower’s credit profile, paving the way for better financing opportunities in the future.

Call our Hire Purchase specialists on 0330 056 3335