Hire Purchase Finance

Portman triangles
  • Tailored deposit & repayment plan
  • Typically available for hard assets
  • Claim capital allowances
  • Potential tax advantages
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427 reviews on 4.8 stars
 
  • Both a lender and broker
  • Nearly £1bn financed since 2007
  • Expert personal service
Portman Hire Purchase

Hire Purchase Finance for your Business

How does it work?

Making Hire Purchase Easy

We know that finance can sometimes be confusing and stressful, but what we do is simple.

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1. Get started in 1 minute.

Enquire without affecting your credit score.

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2. Understanding your business.

A dedicated account manager will discuss your needs and collect documentation.

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3. Our experts do the leg-work.

We find the right deals, complete applications on your behalf and get you a no obligation quote.

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4. Your no-fuss finance is funded.

If accepted, your assets will be bought and delivered or the finance released to your account.

Enquire today
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What does Hire Purchase mean?

Hire purchase involves a business acquiring new equipment, machinery, or vehicles by making an initial deposit and paying or financing the VAT upfront. Fixed monthly repayments are then made, the value of which is affected by whether the customer pays off the entire loan over the term or has chosen a final balloon payment. This contrasts with an equipment lease, which spreads the VAT across monthly payments. There is a final nominal option to purchase fee transferring ownership of the asset to the customer. 

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How does Hire Purchase work?

When a business requires new equipment or vehicles, they determine what’s needed and where they want to buy it. They then contact an account manager at Portman to discuss their finance options, monthly payments, and available payment structures. The most appropriate deal for the customer is secured, the deposit and repayment structure are confirmed, and a financial agreement is formally accepted.

The customer selects the asset, which is then bought by the lender and sold to the customer on credit. The customer must usually pay the VAT upfront and a deposit. The customer then makes fixed monthly payments over an agreed period, including interest. Customers will own the item outright at the end of the term once the contractual payments are made by paying a nominal final option to purchase fee. Portman is both a lender and a broker. One of our panel of lenders, or our team, will buy the item and deliver it directly to you from the supplier.

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When you should look at Hire Purchase Finance

Hire purchase is best suited for situations where a company definitely wants to own the item at the end of the term, often where the asset has a significant usable lifespan, a high residual value, and will not need to be upgraded.

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What happens at the end of the Hire Purchase agreement?

During the agreement period, the asset is owned by the lender. Once the term is complete, the business has a guaranteed option to own the asset. They can do this by either a nominal purchase fee or a balloon payment, depending on which was chosen at the outset.

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Are Hire Purchase payments tax deductible?

Hire purchase involves ultimate asset ownership. You cannot currently offset the entire lease rental payments against company profits. However, you can claim some capital allowances. It may be possible to deduct the interest element of the cost from the company P&L and depreciate the asset’s capital value. We do recommend that you seek professional tax advice.

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How much does Hire Purchase cost?

Hire purchase interest rates often vary based on credit history, business performance, and the type of asset purchased. Portman will explore the market on your behalf as both a lender and a broker and choose the lenders that most closely match your needs.

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Business Benefits of a Hire Purchase Agreement

  • Get what you need now

  • Preserve existing credit lines

  • Structure the deposit and repayments to suit your monthly budget

  • Avoid price inflation 

  • Potential tax advantages

  • Preserve cash flow for operational costs and contingency

  • Capture opportunities immediately

  • Secure fixed competitive rates

  • Useful for expensive assets that will likely retain value

  • Protect your personal wealth

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Hire Purchase FAQs

What happens at the end of a hire purchase agreement? 

At the end of a hire purchase agreement, the borrower has a guaranteed right to purchase the title, i.e. own, the asset for which there may be a nominal administration fee.

What’s the difference between hire purchase and lease finance? 

With a hire purchase agreement, the borrower pays the VAT and a deposit upfront, though these can be financed. With lease finance there is no deposit, and the VAT is spread across each payment. With hire purchase the payments cannot be deducted from corporation tax but it may be possible to claim depreciation and Annual Investment Allowances. With lease finance, the entire monthly payment can usually be deducted company profits before corporation tax is calculated. With hire purchase, the borrower has a guaranteed right to buy the title of the asset they have financed, which will normally be for a nominal administration fee. At the end of a lease finance agreement, the borrower can give back, continue leasing or buy the asset.

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General Enquiries

What are your rates?

The interest rates available to each customer vary based on a large number of factors including the trading history and credit rating of the business, the credit history of any company directors, how much money is required and what the funds are being used for. The rates for customers with an exceptional credit rating start from an annual flat rate of 5.3%.

Do you offer seasonal payment terms? 

Yes, many of our customers naturally experience high demand for their services during certain times of the year as well quieter periods during others. We tailor all finance agreements to the needs of each business, and lower payments can be arranged during periods when there is a predictable reduction in trade.

Do you provide finance outside the UK? 

Unfortunately, Portman can only finance companies registered and operating in the UK.

Can I get a loan if I am on benefits or claiming disability?

Portman only provides business finance and is not able to offer any form of personal credit including benefit loans, disability loans, payday loans or student loans

I thought finance was just for people who can’t afford to buy? 

On the contrary, asset finance is designed to spread costs over a period of time, whilst your new equipment generates revenue. Using your business’ cash or credit card and buying outright can mean that there’s no free cash for emergencies or to cover fluctuations in demand. Using finance helps even out the monthly budget and choosing a lease finance or hire purchase deal allows you to treat tax in different ways which may suit your business better. Finance allows you to get what you need now, rather than waiting to buy outright, this helps avoid inflation, as you buy at today’s prices and means you have use of the asset immediately to help grow your business.

How long will I be paying back the finance? 

Terms are available between 2 and 6 years. Options available to you may be dependent on the circumstances of your business, but then the final choice is up to you.

Our experts can find the right funding for you.

Find out how we can help today.

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