1. WHAT IS hire purchase?
Hire Purchase gives you the option to purchase the asset for a small fee at the end of the agreement.
With Hire Purchase, you generally pay a higher amount upfront and then the remaining cost of the asset is split and repaid at a pre-agreed fixed-rate of interest per month until the end of the agreement.
At the end of the agreement, you will be given the option to purchase the asset outright for a small fee.
2. what is lease financing?
With Lease Financing, the funder (us) would purchase the asset and you would have use of the asset during the lease.
Essentially you would select the asset you need and a finance company (like us) would purchase that asset. You would then pay a series of instalments for the use of the asset.
With our Lease Financing, you pay a lower amount upfront than you would for Hire Purchase. Then the remaining cost of the asset is split and repaid at a pre-agreed fixed-rate of interest per month until the end of the lease. You can also keep the asset at the end of the primary lease period, however, this is subject to an annual rental.
3. WHAT IS BETTER FOR MY BUSINESS?
Let's take a look at why businesses would choose Hire Purchase or Lease Financing.
Selecting which one is right for your business really comes down to the payment preference.
Businesses will generally opt for Hire Purchase if they would prefer to pay a higher amount upfront. With Hire Purchase, the VAT can generally be claimed back in the normal way*.
Leasing, on the other hand, tends to have a lower upfront cost and the VAT charged with each rental, with the VAT being reclaimed as payments are made*.
*There are different treatments of the products from a tax, VAT and accounting perspective and your advisers will be best placed to let you know how your business will be affected.
We are always here to help so if you are unsure of the best route to take just call us on 0808 274 1672 and we can chat through the options to find out what's best for you.
4. What is refinancing?
Refinancing allows you to release cash that's tied up in your existing assets.
Refinancing allows you to release the capital you’ve got tied up in your existing equipment for a variety of purposes. Refinancing can help boost your cashflow and it can be provided on both lease and hire purchase agreements even if you have money still left to pay.
Usually refinancing is worked out as a percentage of the assets equity and if you own the asset without finance you will typically be able to get a higher percentage of the items overall value. If you have an asset that you would like refinanced just get in touch on 0808 274 1672 to find out how we can help.