Hire Purchase - Anglo Scottish Finance

Hire Purchase

WHAT IS A HIRE PURCHASE AGREEMENT?

Hire purchase is a type of lease agreement that gives you the option to own the asset at the end of the term. After an initial deposit, the outstanding balance is paid off in monthly instalments.

With this type of finance agreement, the instalments, even if they include a contractual balloon instalment, will amortise the full balance of the asset down to zero.

After all the instalments have been paid, you will be given the option to take ownership of the asset. There is normally a nominal fee to do this which has no bearing on the market value of the goods.

Hire purchase agreements are a popular way of funding vehicles and machinery so that they are owned outright at the end of the agreed term.

Considering other asset finance options? Don’t hesitate to ask about your options when you get in touch.

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HOW DOES HIRE PURCHASE WORK?

Agreements usually involve an upfront deposit to secure asset, after which the payments are determined according to the length of the agreement. Interest rates are charged as part of the hire purchase terms can be either fixed or variable.

The duration of the hire purchase agreement can vary to suit your budget and business needs.

KEY POINTS

  • Use the assets while spreading the cost over a fixed period.
  • Take full ownership when the final payment is made
  • It is important to note that you will be responsible for the servicing and maintenance of the asset, especially when it comes to vehicle hire purchase, unless a specific maintenance contract is entered into.

WHAT ARE THE BENEFITS OF HIRE PURCHASE?

  • Regular instalments spread the cost over the course of the finance agreement
  • Can free up vital capital in the business
  • Low deposit options
  • Fixed and variable interest rates
  • Business purchases may benefit from corporation tax savings.
  • Potential to offset the interest against taxable profits and claim capital allowances on the capital.
  • On-balance sheet funding allows you to maximise your asset base.
  • The security taken by the lender is the asset, not a charge over the business as a whole
  • Ownership is transferred at the end of the agreement, subject to payment of all instalments and the option-to-purchase fee.

HOW IT WORKS

Decide

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DECIDE

Decide on the asset you need to help your business grow

Talk

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TALK

Talk to us, tell us about your business and the asset you wish to acquire.

Approval

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APPROVAL

We will reach out to our panel of lenders on your behalf to gain approval.

Sign

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SIGN

Sign your document, once approved we’ll send you your documents to sign. After which we will transfer payment to your asset supplier

Final checks

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FINAL CHECKS

We’ll do a final check to make sure everything is running smoothly, and you can start reaping the benefits of your new asset.

NEXT STEPS

Get in touch with a member of our team for expert advice and to discuss your options.

CASE STUDIES

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For many small businesses, accessing traditional funding from banks can be challenging, this is especially true for sole traders, which is why many chose instead to utilise asset finance. We take a look at why asset finance and sole traders work so well together.