What is Hire Purchase Finance?
In a commercial hire purchase agreement, the business selects the asset it wishes to purchase, such as vehicles, machinery or equipment. The hire purchase finance company buys the asset on behalf of the business, which hires the asset over a fixed term, usually ranging from one to five years. During this period, the business makes regular repayments that include both the principal and interest.
One of the key advantages of hire purchase finance is the flexibility it offers in structuring the finance agreement. Lenders collaborate closely with clients to tailor repayment plans that align with their unique cash flow and business cycles. This flexibility allows businesses to manage their finances more effectively, enabling them to invest in the assets they need to drive growth and productivity. The business can also enjoy the benefit of asset ownership once all repayments have been made. This means that the business gains full ownership rights to the asset without having to bear the burden of ownership during the financing period. The interest and depreciation on the asset may also be tax-deductible, providing additional financial advantages.