Hire Purchase, also referred to as Lease Purchase, is a simple and flexible finance arrangement that allows you to pay for an asset in monthly installments. This type of asset finance offers exceptional flexibility and predictable costs.
Under a Hire Purchase agreement:
- You pay fixed monthly installments over a set period, typically ranging from 24 to 84 months, with a fixed interest rate.
- The creditor retains legal ownership of the asset until the final payment is made.
- The VAT on the purchase price is paid upfront by you, along with any deposit, and can be reclaimed through your quarterly or monthly VAT return.
At the end of the agreement, there may be a small option-to-purchase fee, which is always disclosed upfront and is typically modest.
Benefits of Hire Purchase:
- Ownership: Once all repayments are completed, the asset becomes yours.
- Balance Sheet Advantage: The asset remains on your balance sheet, contributing to your business’s equity.
- VAT Efficiency: Monthly repayments are not subject to VAT, offering potential cash flow benefits.
Tailored Finance Solutions
At Richmond Asset Finance Ltd, we are committed to helping you find the right finance package for your needs. While Hire Purchase is a great solution for many, it may not be the best fit for every business. Our team works closely with you to explore all options and tailor a solution that supports your business goals.