Hire Purchase enables you to acquire an asset while paying for it in instalments over an agreed term. At the end of the term, you have the option to purchase the asset outright by paying a small Option to Purchase fee with the final instalment. It lets you spread the cost of your investment over the life of the asset, making it easier to budget. You can incorporate a balloon payment at the end of the agreement to reduce the monthly instalments – known as Lease Purchase. Hire Purchase is also suitable for refinancing existing assets. You can settle the agreement at any time.
Benefits of Hire Purchase
- More time to repay – Spread the cost over the life of the asset
- Keep control – You are the owner of the asset for tax purposes and can normally claim capital allowances
- Tax efficient – You can offset your hire purchase interest and charges against pre-tax profits
- Reclaim VAT