hire purchase
If you’re looking to buy something for your business but want to spread the cost over monthly instalments, hire purchase allows you to do just that and you’ll be able to own the asset outright at the end of the agreement.
hire purchase
helping your business to grow...
Hire purchase (HP) lets you spread the purchase cost of an asset, like a car or equipment, over a longer period with fixed regular payments. It can be flexible on the cost of your deposit, monthly payments and the final lump sum to suit your business needs.
When you pay for whatever you’re buying using hire purchase there’s normally a deposit to be paid and the VAT is paid upfront – unless you take advantage of our 3-month VAT deferral.
Remember, when opting for hire purchase, your business will own the item at the end of the agreement.
If you don’t have time to speak to someone, Asset Finance Compared is our online platform that allows you to get a Decision in Principle in 60 seconds, wherever you are.
Call 0115 958 6872, email enquiries@maffinancegroup.co.uk or fill in an enquiry form for further information.
some of the sectors that we work in...
hire purchase explained...
Hire purchase (HP) lets you spread the purchase cost of an asset, like a business car or piece of equipment, over a period of time with fixed regular payments. It can be flexible on the cost of your deposit, monthly payments and the final lump sum to suit your business needs.
A hire purchase is essentially renting an asset until it’s paid off fully, after which, you will own it outright.
HP must be taken out through a finance facility like a broker, bank or building society, or sometimes directly through the owner, like a car dealership.
In some cases, HP agreements will include a final payment to confirm the transfer of ownership. The payment period for larger hire purchase agreements typically ranges between 2 and 5 years, while smaller purchases may be shorter.
During the HP payment period, you can use the asset as if you own it, but you cannot legally sell or dispose of an asset that you’re borrowing via hire purchase until you’ve paid for and then own it. If a business fails to make payments on time, they run the risk of the assets being repossessed and returned to the original owner.
- A useful agreement if you can’t afford to make a big payment upfront.
- Flexible payments are an option to reduce your monthly payments by paying a larger deposit or a large sum at the end of the agreement.
- At the end of the contract, you will own the asset.
- You can defer the VAT for 3 months with HP.
- Fixed rate loan so interest rates tend to be low.
If your business needs an asset to expand but can’t afford to purchase the asset outright, then a hire purchase agreement could be the right option. Hire purchase allows you to spread the cost of the asset purchase over a longer period with fixed repayments to suit business needs.
At the end of the term, you can simply hand the asset back to the finance company.
However, you may be offered a secondary period lease for a nominal amount, known as a ‘peppercorn’ rental – essentially starting the lease again.
A third option is selling it to a third party that isn’t related to your business, at a fair market value.
If you sell it for more than the final payment of the asset, you will be able to keep a pre-agreed percentage of the net sale profit. However, if it’s worth less, you will be invoiced for the difference.
things to consider...
term length
Assets can be funded for up to 7 years
useful life
Funding can be arranged over the useful life of the asset, sometimes with a balloon payment
vAT
You can delay paying the VAT for 3 months through our VAT deferral option.
so how does hire purchase work?



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get in touch...
0115 958 6872 and a member of our team will be happy to speak to you.