Hire Purchase

Hire purchase offers your business a simple way to spread the cost of acquiring new commercial assets.



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If you would like to purchase a new commercial asset without paying for the full amount upfront, a hire purchase agreement could offer the right funding solution for your business. This type of asset finance requires you to pay regular instalments that cover the value of the asset along with the lender’s fees and interest. Many businesses choose hire purchase as a convenient and cost-effective source of funding when purchasing high value goods, such as vehicles, machinery, plant and equipment.

What Is Hire Purchase?

If you want to invest in new commercial equipment but you do not have enough working capital to purchase the asset outright, hire purchase offers an extremely effective form of borrowing. Hire purchase (HP) for business is a type of alternative finance that allows businesses to invest in new collateral via regular fixed payments. The terms available for hire purchase range from twelve to sixty months to suit the needs of your business and financial circumstances.

If you are investing in equipment that you require long-term and ownership of assets is a priority for you, hire purchase offers a useful funding option for your business. You can use the asset immediately and pay for it within an agreed timescale. However, if you only need the asset on a short-term basis, equipment leasing may offer a more flexible alternative, as you can return it at the end of the agreement.

If your business is looking to invest in new collateral, find out if you qualify for a hire purchase agreement by completing our short, no obligation online application. You will receive a decision from one of our trusted alternative finance partners within a matter of hours.

How Does Hire Purchase Work?

To take advantage of a hire purchase arrangement, you will be required to pay an initial deposit and the VAT upfront. You then pay the remaining balance plus the interest owed in instalments over an agreed term. Some lenders will require you to settle a final payment, often referred to as a balloon payment or completion fee, at the end of the agreement, which can reduce the amount you repay per month.

In some instances, you are not granted ownership rights until the end of the agreement when all instalments have been settled. However, some alternative finance providers will allow you to add the asset to your balance sheet at the start of the hire purchase agreement.

What Are The Benefits Of Hire Purchase?

Hire purchase enables you to invest in the most up to date equipment or latest vehicle models without having to pay the full cost upfront. You can spread the cost of new business assets over an agreed timeframe. As instalments are fixed, you can effectively manage your cashflow to accommodate the investment.

  • Allows you to invest in the latest equipment
  • Fast turnaround within days
  • Highly flexible terms to suit you
  • You will own the asset after final payment
  • Cashflow friendly solution

It is possible, in certain circumstances, to spread the cost of the repayments over the life of the asset. Additionally, some alternative finance providers offer seasonal repayment plans, which are particularly beneficial to those businesses that experience fluctuations in sales throughout the year. You may also qualify for tax and VAT benefits, depending on your individual circumstances.

Does Your Business Qualify?

Hire purchase is a relatively straightforward funding source because the asset is used as security against the cash loan. To qualify for business hire purchase, you must operate a UK-registered limited company with an annual turnover of £10,000.

If you do not qualify for hire purchase, Capalona can find the right funding solution for your business. View our range of alternative finance options now.

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