Spread the cost of purchasing equipment

Hire Purchase is an instalment agreement where the hirer agrees to pay the cost of the equipment in regular instalments over a period of time. This instalment covers the principal amount and the interest cost towards the purchase of an asset for the period the asset is utilised. The hirer gets the possession of the asset as soon as the hire purchase agreement is signed and becomes the owner of the equipment after the last payment is made. The hirer has the right to terminate the agreement any time before taking the title or the ownership of the asset.

There are various considerations when deciding whether Hire Purchase or Lease Finance is most suitable for the business.

• Ownership – The user may be classified as the owner for balance sheet purposes, but title of ownership remains with the finance company until full balance is paid.
• Depreciation: Depreciation is claimed by the hirer and not the
• Rental Payments: The instalments are inclusive of the principal amount and the interest for the time period the asset is utilised.
• Duration: Generally hire Purchase agreements are for a shorter duration than Finance Leases and for less valuable assets such as vehicles and small machinery.
• Tax Impact: In hire purchase, the hirer claims the depreciation of asset as an expense.
• Repairs and Maintenance: The hirer is responsible for all maintenance and repairs
• Extent of Finance: Usually around 20 to 25% is required to be paid upfront by the hirer.

Finance Leasing offers different benefits and we can advise you on the most appropriate method for your business.

Talk to one of our advisers on the options surrounding hire purchase and other business funding options today. We’re always