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Hire Purchase – Advice
Hire purchase can get the cash flowing.
Hire purchase can be a great way to get the cash flow flowing in your business. And in today’s cash-strapped economy where cash is king like never before, hire-purchase can offer a real lifeline.
If your business needs any kind of equipment such as IT, vehicles, plant or machinery, for example, but cash is tight - hire purchase (sometimes called lease purchase) can be a solution that helps keep things ticking over to see you through the worst of times.
Hire purchase enables a company to take delivery of the assets it needs immediately, whilst the cost can be spread the cost over two to seven years. Finance can often be provided for 100% of the purchase price of the equipment, with the option to defer the VAT if need be.
Repayments can be tailored to fit both your cash flow and the depreciation of the assets. You can also choose to own the assets at the end of the term with a nominal final payment.
One of the most appealing features of hire purchase is its tax-efficiency as the interest is tax-deductible and you can claim capital allowances on the assets immediately. And unlike some other forms of business loans, additional security is not usually required and a hire purchase agreement is not repayable on demand. Also, funding is on balance sheet and you have a choice of fixed or variable interest rate agreements.
But as with all other forms of funding, it’s essential to seek expert advice before entering into a hire purchase agreement.