Hire Purchase
Hire purchase is a well established and popular method of financing the purchase of equipment by businesses. The equipment is funded over a set term and the finance company has title to the asset until the final instalment is paid. The customer can claim writing down allowances and VAT is reclaimable on the capital cost.
Features
- Ownership at end of finance agreement.
- Equipment shown as an asset on the balance sheet and amount owed as a liability.
- VAT on equipment usually paid in full at outset.
- Choice of using fixed or variable rates.
- Negotiable deposits or payment structures to suit the customer's cashflow.
Benefits
- Customers can recover writing down costs and VAT on the assets.
- Tax relief can be claimed against finance interest repayments.
- The equipment can be used immediately whilst payments are staggered over an agreed period allowing the customer control of vital working capital and a better cashflow.
- Hire Purchase is not repayable on demand providing payments are made in accordance with the terms of the agreement.
- Most equipment can be funded allowing the customer to increase efficiency and productivity.
- Payment can be structured around the customer's cashflow or seasonality of their business.
- Full title to the equipment passes to the customer at the end of the agreed term.