Hire purchase
Instalments across an agreed term, and the asset is yours at the end of it. The most straightforward way to buy equipment you intend to keep.
Request a callback- Typical amount
- £5,000 to £5m+
- Typical term
- 1 to 7 years
- Deposit
- Often 10% or the VAT
- Ownership
- Passes to you at the end
Figures are indicative market ranges at the time of writing, not offers or quotes. What is available to your business depends on the lender, your circumstances and the security available.
About hire purchase
Under a hire purchase agreement the funder buys the asset and you pay for it in instalments. Title stays with the funder until the final payment and a small option-to-purchase fee, at which point the equipment becomes yours outright.
It is the closest thing in asset finance to simply buying the item, which is why it suits equipment with a long working life and a decent resale value. If you would still want the machine in five years, hire purchase is usually the structure that makes sense.
Deposits are common — often around a tenth of the price, or sometimes just the VAT element, which you can then reclaim in the normal way. Because you are treated as the owner for tax purposes from the outset, capital allowances generally apply to the full cost from day one. Your accountant should confirm how that works for your business.
Good reasons to choose it
- You want the asset at the end, and it will still be useful when the agreement finishes.
- The equipment holds value well, so ownership is genuinely worth having.
- You would rather fix the monthly cost for the whole term than expose yourself to rate movement.
- You want the capital allowances that come with being treated as the owner from the start.
- The asset is central to how the business earns, and you do not want to hand it back.
Points to weigh up
- Monthly payments are higher than a lease over the same term, because you are paying off the whole asset.
- A deposit is usually required, so it is not a way to avoid all up-front cost.
- You carry the risk on residual value: if the asset is worth less than expected at the end, that is your loss.
- Maintenance, insurance and repair sit with you throughout.
- Some agreements end with a larger balloon payment, which lowers the monthly cost but needs planning for.
Frequently asked
What is the difference between hire purchase and a lease?
Ownership. Hire purchase ends with the asset belonging to you; a lease does not. That makes hire purchase dearer month to month but better value on equipment you intend to keep, and leasing better where you want to hand the asset back and take a newer one.
What is a balloon payment?
A larger lump sum at the end of the agreement, set against the asset's expected value at that point. It brings the monthly figure down, but the money still has to be found — either from cash, from selling the asset, or by refinancing the balance.
Can I settle the agreement early?
Yes, though the cost varies. Some agreements rebate a portion of the interest you have not yet incurred; others charge more or less the full contracted amount. We will show you the settlement terms on any quote before you accept it.
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Tell us what the money is for
A short conversation is usually enough for us to tell you what is realistic — including when the answer is that you should not borrow.
