Hire Purchase or Finance Lease
Hire Purchase or Finance Lease. Which is best for your business?
Both are particularly beneficial for businesses that want to maintain cash flow, invest in growth, or access the latest assets without the risk of obsolescence. Asset finance often comes in several forms with different advantages and it’s important to know which is best for you.
Hire Purchase (HP):
What is it?
Hire Purchase (HP) allows your business to spread the cost of essential assets over time while gaining full ownership at the end.
Own your equipment, vehicles, or machinery without large upfront costs.
How Does It Work?
- Choose Your Asset – Pick the equipment, vehicle, or machinery your business needs.
- Pay a Deposit – This can be as low as just the VAT.
- Fixed Monthly Payments – Spread the cost over 1-8 years.
- You Own It – At the end of the term, the asset is yours!
Why Choose this product?
✅ Preserve Cash Flow – Keep funds available for day-to-day operations.
✅ Fixed Payments – Easy budgeting with no surprises.
✅ Tax Benefits – Claim capital allowances & reduce tax liability.
✅ Own the Asset – Unlike leasing, you fully own it after the final payment.
Example: How It Works in Real Life
Need a £40,000 delivery van?
- Deposit: £4,000 (10%)
- Monthly Payment: £600 for 5 years
- Ownership: You own the van after the final payment!
Start using your new asset now – without the big upfront cost!
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Finance Lease:
What is it?
A Finance Lease lets your business use high-value equipment, vehicles, or machinery without the upfront cost of buying.
Use the asset for an agreed period while making fixed monthly payments! At the end, you can extend the lease, upgrade, or return it.
Why Choose this product?
✅ No Large Upfront Cost – Keep your working capital free.
✅ Fixed Monthly Payments – Easy budgeting with no surprises.
✅ Access to the Latest Equipment – Upgrade at the end of the term.
✅ Tax Benefits – Lease payments may be 100% tax-deductible as a business expense.
✅ Off-Balance Sheet Advantage – Assets don’t appear on your balance sheet, improving financial ratios.
How Does It Work?
- Choose Your Asset – Pick the equipment, vehicle, or machinery your business needs.
- Fixed Monthly Payments – Use the asset for an agreed term (typically 1-5 years).
- Flexible End-of-Term Options – Choose to extend the lease, upgrade to a new model, or return the asset.
Example: How It Works in Real Life
Need a £50,000 piece of machinery?
- Monthly Lease Payment: £850 per month
- Lease Term: 3 years
- End-of-Term Choices:
✔️ Upgrade – Swap for a newer model
✔️ Extend – Keep leasing at a reduced rate
✔️ Return – Hand it back with no further obligations
Stay flexible, keep cash flow strong, and access top-tier equipment without ownership risks!
Ready to Apply?
Have you ever considered Invoice Finance?
Hire Purchase vs. Finance Lease: Which is Right for You?
| Feature | Hire Purchase (HP) | Finance Lease |
|---|---|---|
| Ownership | You own the asset at the end. | No ownership – lease only. |
| Upfront Cost | Deposit required (10-30%). | Minimal Deposit. |
| Monthly Payments | Fixed payments (capital + interest). | Fixed rental payments. |
| End of Term | Asset is fully yours. | Extend, upgrade, or return. |
| Tax Benefits | Claim capital allowances. | 100% tax-deductible payments. |
| Best For | Businesses wanting ownership. | Businesses needing flexibility. |
Hire Purchase (HP)
✔️ You want to own the asset at the end.
✔️ You’re investing in long-term assets like vehicles or machinery.
✔️ You prefer fixed monthly payments with no surprises.
✔️ You want to claim capital allowances on the asset.
Example: A construction company buys a £50,000 excavator on HP with a £5,000 deposit and fixed payments over 5 years. After the final payment, they own it outright.
Finance Lease
✔️ You don’t need to own the asset, just use it.
✔️ You want lower upfront costs (or no deposit).
✔️ You want to upgrade to newer models after a few years.
✔️ You want 100% tax-deductible lease payments.
Example: A logistics company leases a fleet of vans for 3 years with fixed monthly payments. At the end of the term, they can upgrade to newer vans without worrying about resale value.
Tell us about your business so we can identify the best financing options to support your goals.