Hire Purchase is a popular finance solution for businesses who are looking to purchase assets such as vehicles or equipment. Hire purchase can be the best solution if you want to have ownership of the asset at the end of your agreement and want to show the asset on your balance sheet.
How does Hire Purchase Work?
Unlike Finance Lease, on a Hire Purchase contract you pay the VAT up front at the outset of the agreement. After paying the VAT you would then pay the agreed number of payments. At the end of the agreement you have the option to take title for a nominal option to purchase fee.
Advantages of Hire Purchase
- Ownership – Hire Purchase gives beneficial title from day one and the asset is yours at the end of the agreement.
- Fixed Interest – The interest is fixed for the term, so the monthly repayments don’t change. This can enable you to budget more efficiently.
- Tax Advantages – As you have beneficial title from day one, you can claim against your full capital allowances for the purchase.
- Reclaim VAT.
For more information about Busby Finance Ltd or Hire Purchase, please contact us.