Hire Purchase (Asset based lending)

Hire Purchase agreements offer businesses the ability to acquire essential assets immediately while distributing the cost over an agreed repayment schedule. This financing structure enables companies to take possession of the asset from the outset, alleviating the burden of large upfront capital expenditure.

Asset finance, more broadly, refers to funding arrangements that facilitate the acquisition or leasing of critical operational assets without requiring immediate full payment. It may also involve leveraging existing owned assets as collateral to secure additional financing.

These agreements are typically structured as secured loans, wherein the financed asset or other existing company assets serve as security for the lender. In the event of non-repayment, the lender reserves the right to repossess the asset to recover outstanding balances.

This form of funding is frequently employed for the procurement of high-value equipment, vehicles, or technology. Lenders assess the asset’s eligibility based on DIMS criteria—evaluating whether it is durable, identifiable, moveable, and saleable—and may further categorize assets as either ‘hard’ or ‘soft’ depending on their resale potential and depreciation characteristics.