Hire Purchase

About Hire Purchase Agreements

A hire purchase lease allows you to purchase the asset at the end of the contract. After a down payment, the remaining amount is paid in equal monthly installments.

With this manner of financial arrangement, the installments, even if they contain a contractual lump sum payment, will find ways to reduce the entire asset balance to nil.

You will have the opportunity to purchase the asset once all the installments are paid. There is typically a small fee for doing this, which is unrelated to the market worth of the asset.

How Does Hire Purchase Work?

Hire purchase contracts are a standard method of financing cars and equipment so that they are purchased outright after the specified period.

In most agreements, a deposit is required at the outset to reserve the asset, and payments are then calculated based on how long the contract will last. Interest rates, which are included in the hire purchase arrangements, may be fixed or variable.

The hire purchase agreement’s period can be altered according to your financial situation and company requirements. Are you thinking of different asset financing options? Please do not hesitate to contact us to enquire about alternatives.

Essential Concepts

A hire purchase is a lease agreement that allows you to use an asset for any purpose, and its price is paid in equal monthly installments. The lessee becomes the asset’s owner after paying the last instalment. In this particular type of agreement, the lessee is responsible for the maintenance and insurance of the asset.

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What Are The Advantages Of Hire Purchase?

Options with a low initial deposit.
Both fixed and variable rates of interest.
It can help a company free up capital critical to its success.
Corporation tax advantages may apply to business purchases.
The asset is not a charge to the company but the lender's security.
Funding lets you get the most out of your asset based on your balance sheet.
Interest can be deducted from taxable profits, and capital allowances can be claimed on the capital.
The expense is spread out throughout the life of the finance arrangement with regular installments.
After paying the option-to-purchase fee, the vehicle or asset ownership will be given to you at the expiry of the agreement and subject to full payment.

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