Asset finance · Hire purchase
Hire purchase for vehicles, plant and machinery
Spread the cost of an asset you intend to keep. Fixed payments, no surprises, and it is yours at the end.
In short
Buy it over time, own it at the end
Hire purchase is the most straightforward way to buy an asset you want to keep. You put down a deposit, pay a fixed amount every month for an agreed term, and once the final payment and the option-to-purchase fee clear, the asset is legally yours.
Because it counts as your asset from the start for accounting purposes, the capital allowances are yours to claim rather than the funder’s. For most SMEs buying a van, an excavator or a machine tool they will still be running in six years, that makes hire purchase the cheapest way to get there.
Hire purchase — key terms
REF HP- Typical term
- 12 to 60 months (up to 84 on some assets)
- Initial outlay
- Deposit from around 10%, plus the VAT
- VAT treatment
- Paid in full at the start; reclaimable on your next return
- End of agreement
- You own the asset after the final payment and option-to-purchase fee
- Balance sheet
- On it from day one — the capital allowances are yours
Interest is charged on the finance element, not on the VAT. Capital allowance treatment depends on the asset and your circumstances — confirm it with your accountant.
Best suited to
When hire purchase is the right call
- Assets you will still be using long after the agreement ends
- Kit that holds its value — vans, tippers, tracked plant, machine tools
- Businesses that want the capital allowances on their own books
- Owners who would rather own outright than keep renewing
The detail
What it costs and how quickly it moves
Deposits usually start at around 10% of the purchase price, plus the VAT. On hire purchase the VAT falls due at the start and you reclaim it on your next return if you are VAT-registered. Terms run from 12 to 60 months, and up to 84 on assets with a long working life.
We price the deal across our funder panel and, where the asset is a vehicle, against the direct terms we hold with the manufacturers. You see the rate, the term and the fees written down before you commit to anything. If hire purchase is not the right answer for you, we will say so and point you at the option that is.
- Fixed payments — your cashflow forecast stays accurate
- Deposit from around 10%, plus the VAT on the purchase price
- Terms of 12 to 60 months, longer on some assets
- You own it outright once the agreement finishes
- Indicative terms same day in most straightforward cases
Common questions
Questions we get asked
Yes. Ask us for a settlement figure at any point and we will get it from the funder. You will pay the outstanding capital plus a portion of the remaining interest, and the exact rebate depends on the agreement. That is why we go through the early settlement terms with you before you sign rather than after.
Not legally — the funder holds title until the final payment and the option-to-purchase fee are paid. In practice you have full use of it throughout, and for accounting purposes it sits on your balance sheet from day one. The one thing you cannot do is sell it without settling the agreement first.
Usually around 10% of the price plus the VAT, though it moves with the asset, the term and your trading history. Strong accounts and a mainstream asset can mean less. If the deposit is the sticking point, tell us early — refinancing something you already own will often free up the cash to cover it.
Where to next
Related to this
Next step
Talk hire purchase through with someone who does it daily
Send the make, model and price and we will come back with indicative terms — usually the same working day.