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Hire purchase

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Hire purchase is a form of asset finance, allowing a business to purchase new assets while spreading out the repayments. Doing so removes the hefty initial expense, allowing your business to expand and attract new customers.

What is hire purchase?

Businesses will, on occasion, need to purchase new assets. Investing in vehicles, machinery, IT equipment and software can give you the edge over your competitors.

Hire purchase involves a funder purchasing equipment or assets on the business’ behalf. After the initial deposit, the business receives the asset and repays the balance in affordable monthly instalments. After making the final payment, ownership of the asset is transferred from the finance company to your business.

Hire Purchase

Hire purchase advantages

Hire purchase has many benefits for your business in both the short and long-term.

  • Flexible. The initial deposit’s size can be tailored to your needs, along with the repayment terms and length of the arrangement.
  • Fast. You’ll receive the asset almost immediately without the need for the heavy upfront cost of purchasing it outright.
  • Access to better assets. Your business could potentially access more up-to-date equipment and assets than it could afford to buy outright.
  • Helps your cash flow. By spreading the cost over time, hire purchase limits the impact on your cash flow, and a consistent line of credit can improve your credit rating (as long as you keep to the repayments). This also makes it easier to produce cash flow forecasts going forward.
  • Asset ownership. Unlike with leasing, your business owns the asset once the hire purchase agreement ends. This means hire purchasing can be a more cost-effective way of purchasing assets. They can even be used as security against loans and other finance, adding to your business’ value.

In summary 

Hire purchase can allow your business access to modern assets; vehicles, machinery, software, etc., allowing you to stay competitive without a heavy impact on your cash flow. It is a fast, flexible arrangement that can help improve your business’ cash flow, paying for the asset in affordable monthly instalments. The asset is transferred to the business once the final payment is made.

How we can help 

If your business needs to upgrade its equipment but doesn’t have the funds to buy them outright, a hire purchase arrangement could help you.

With years’ experience in the industry, we have developed strong relationships with several funding partners, and we will work to match you with the one best suited for your circumstances. Speak to us today to get the ball rolling. Our initial advisors can offer free, impartial advice and a no-obligation quote.

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Authored by Richard Froggatt

Richard Froggatt

Senior Consultant

Beverley Horton Christopher Callaghan Stephen Hall

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