What is Hire Purchase (HP)?
An asset finance solution where a business pays for an asset in instalments over an agreed term, taking full ownership of the asset once the final payment is made.
The Details
Hire Purchase is a straightforward way to acquire expensive machinery, equipment, or commercial vehicles without the crushing upfront capital expenditure. The business pays an initial deposit followed by fixed monthly instalments covering the capital cost plus interest. For tax and accounting purposes, the asset typically appears on the company's balance sheet from day one, allowing the business to claim capital allowances. Ownership automatically transfers to the business upon payment of the final "Option to Purchase" fee.
Commercial Relevance
The preferred funding route for hauliers, construction contractors, and manufacturers who want to permanently own their plant and machinery while protecting their day-to-day cash flow.