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Hire Purchase Finance
- Tailored deposit & repayment plan
- Typically available for hard assets
- Annual Flat rates from 4.4%
- Potential tax advantages
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Preserve business cashflow
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Enquire in under 60 seconds
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Rent-to-own essential assets
Effortless Asset Ownership Through Hire Purchase
We make finance fast, simple and stress-free
Get started and apply for HP financing to acquire the assets your business need. Enjoy flexible payments and the option to own the equipment at the end of the agreement. Business Hire Purchase offers a convenient way to access the capital you need to invest in your business and improve its operations.
If you need a loan to cover new business equipment, take a look at asset finance which offers great interest rates, or for a business vehicle, have a look at commercial vehicle finance.
What is business hire purchase?
Hire Purchase (HP) is a financing solution that enables businesses to acquire new assets without the need for immediate upfront capital. This finance solution involves an initial deposit payment, followed by fixed monthly instalments. At the end of the agreement, the business has the option to purchase the asset at a nominal value, thereby transferring ownership.
This contrasts with equipment leasing, where the business rents the asset and does not have the option to purchase it at the end of the lease term. Hire Purchase offers businesses the flexibility to own the asset after fulfilling their financial obligations.
How does hire purchase work?
When a business requires new equipment or vehicles, they determine what is needed and where they want to buy it. Our process involves a thorough evaluation of your requirements, followed by tailoring a financing plan that aligns with your budget and preferences. We secure the most appropriate deal for the customer, the deposit and repayment structure are confirmed with you, and a financial agreement is formally accepted. For HP, the customer must usually pay the VAT upfront and a deposit. You’ll then make fixed monthly payments over an agreed period, including interest, owning the item outright at the end of the term once the contractual payments are made by paying a nominal final option to purchase fee.
If you are unsure that hire purchase is the right option for your business, read our article on the 6 Types of Asset Finance & Finding the Right Solution to understand alternative and better suited asset-based finance options.
Is hire purchase a good idea?
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.
Asset-Based Lending Alternatives
There are a various asset finance solutions available to suit different requirements and situations.
- Commercial Vehicles (CVs) – Finance for any business vehicle
- Lease Finance – Comfortable monthly lease payments
- Equipment Finance – Any asset for all industry sectors
- Equipment Refinance – Release equity from your assets
We can help you find a tailor-made funding option for your business, through our panel of 45+ lenders and expertise as a broker with backed financial experience.
Enquire with us online for more on how we can help fund your business requirement.
Access the funding you need to grow your business
Manufacturing, construction, transport, and engineering, are just some of the industries commonly using hire purchase.
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.
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.
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.
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
Our team of experts is ready to help
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.
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, company turnover, how much money is required and what the funds are being used for. For customers with the best credit rating, Annual Flat Rates start from: Vehicle Finance – 5.5% Asset / Equipment Finance – 5.9% Growth Guarantee Scheme Asset Finance – 6.49% Unsecured Term Loan – 7.2% No PG Tax Loan – 9.4% Short-term Loan – 12.3% Short-term Flexi-Loan – 13.2%
Do you offer seasonal payment terms?
Yes, Portman does offer seasonal payment terms. 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.
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