Buying a vehicle or replacing essential equipment can be a big cost for any business but business hire purchase allows you to spread that cost over time and use the asset straight away.
Just pay a hire purchase deposit at the start, then repay the balance over an agreed term. Once the agreement is complete and any option to purchase fee has been paid, the asset then becomes yours.
Phoenix Commercial Finance works with a wide panel of lenders across the hire purchase market. We can help you find hire purchase finance for the vehicles or equipment your business needs.
If you would like to speak to one of our experts about Hire Purchase, send us a message on WhatsApp or complete our no-obligation enquiry form.
Hire Purchase is a form of asset finance that lets your business buy an asset without paying the full purchase price upfront.
The finance provider purchases the asset, and your business makes regular repayments over an agreed period. You can use the vehicle or equipment throughout the agreement, but the finance provider remains the legal owner until the final payment has been made.
For businesses that intend to keep the asset long term, Hire Purchase can be a straightforward way to spread the cost of equipment instead of making one large payment from your cash reserves.
First, you choose the vehicle or equipment you want to buy and decide how much finance you need. A deposit is usually paid at the start of the hire purchase agreement with the remaining balance repaid over the agreed term. Most lenders offer 12-to-84-month terms, depending on the type of asset and your business circumstances.
If you choose a fixed-rate agreement, your repayments will usually remain the same each month. These fixed monthly payments can make it easier to plan the cost over the term.
Some agreements also include a larger final payment. This is known as a balloon payment Hire Purchase structure and can reduce the amount you pay each month.
Hire Purchase is widely used for commercial vehicle finance because it gives businesses use of the vehicle while the cost is spread over time.
If your business needs a new van, business van finance through Hire Purchase can reduce the amount you need to pay upfront. Finance is available for new or used vans, subject to the age of the vehicle and the lender’s criteria.
Once the agreement has been completed, the new van becomes yours.
Hire Purchase can also be used for business car finance. This can suit businesses that expect to keep the vehicle for several years and would prefer to own it at the end rather than hand it back.
The finance available will depend on the vehicle and your business circumstances.
Hire Purchase can also be used to fund equipment that your business relies on.
Equipment finance can help when you need to replace an existing asset or invest in something new but would rather keep more cash available in the business.
The equipment can be used once the agreement is in place, while you pay for it over the chosen term.
For businesses that rely on specialist machinery, Hire Purchase can provide a practical way to fund a replacement or invest in additional capacity.
Machinery finance may be available for both new and used equipment. The lender will usually consider the age of the machinery and its expected working life before agreeing the term.
Higher-value assets can involve a significant upfront cost, especially where specialist plant is involved.
Plant and machinery finance lets you spread that cost over a longer period while keeping the equipment in use throughout the agreement.
If you plan to keep the asset for years to come, Hire Purchase can be particularly useful because you own the asset at the end of the term.
Hire Purchase can also be used for agricultural equipment finance. Depending on the lender, finance may be available for farm vehicles or specialist machinery used within the business.
Phoenix can look at the asset you want to buy and identify lenders that are comfortable financing that type of equipment.
Keep more cash available
Paying for a vehicle or piece of equipment outright can take a sizeable amount of cash out of the business in one go.
Hire Purchase spreads the cost, so more of that money can remain available for running the business.
Use the asset straight away
You don’t have to wait until you have saved enough to buy the asset outright.
Once the finance is in place, you can start using the vehicle or equipment while you repay the borrowing.
Own the asset at the end
Hire Purchase is built around eventual ownership.
Once the agreement has been completed and any final fee has been paid, legal ownership transfers to your business.
Plan the cost
A fixed-rate Hire Purchase agreement can give you predictable monthly repayments throughout the term.
That makes the cost easier to work into your budget from the beginning.
The main difference between hire purchase vs leasing is what happens to the asset at the end.
With Hire Purchase, you are working towards ownership. Once the required payments have been made, the asset becomes yours.
With leasing, the funder generally remains the owner and your business pays to use the asset for an agreed period.
If you know you want to keep the vehicle or equipment, Hire Purchase may be the better fit.
There is also a difference between hire purchase vs finance lease.
A Hire Purchase agreement gives your business a route to ownership once the term has ended.
With a finance lease, the finance company remains the legal owner throughout.
If you’re unsure which type of asset finance suits the purchase you’re planning, Phoenix Commercial Finance can help you compare your options.
Hire purchase for small business can be useful where a vehicle or piece of equipment is needed now, but paying the whole cost upfront would put too much pressure on cash flow.
The amount you can borrow will depend on your circumstances and the asset itself.
Being a smaller business doesn’t automatically rule out Hire Purchase. Different lenders have different requirements, which is where access to a wider lender panel can help.
Different lenders have different criteria for the assets they will finance. A hire purchase finance broker can look across a wider range of options instead of relying on a single provider.
Phoenix Commercial Finance works with a broad panel of UK asset finance lenders. Tell us what you want to buy and how much finance you need, and our team will look for an option that fits.
We will also stay involved as the application moves forward, so you have someone to speak to throughout the process.
If you need finance for a business vehicle or equipment, Phoenix Commercial Finance can help you see what is available.
Tell us what you want to buy and we will look across our lender panel before providing a no obligation quote based on the options available to you.
Send us a message on WhatsApp or complete our quick enquiry form to get started.
The answer depends on which part of the payment you are looking at. The capital element is not normally treated in the same way as a standard business expense, although qualifying assets may be eligible for capital allowances. The interest element may receive different tax treatment. Your accountant can advise you on what applies to your business
VAT on Hire Purchase is generally calculated on the full value of the goods at the start of the agreement. A VAT-registered business may be able to reclaim VAT where the usual rules allow. Speak to your accountant if you are unsure how this applies to your purchase.
A hire purchase deposit is commonly required at the beginning of the agreement. The amount will vary between lenders and can affect the balance you need to finance.
Some lenders offer agreements with a larger final payment. A balloon payment Hire Purchase structure can reduce your regular monthly repayments, although you will have more to pay at the end of the term.
An option to purchase fee is a payment that may be due at the end of the agreement before ownership transfers to you. If one applies, it should be set out in the agreement from the start.
Yes, many lenders will consider used equipment. The finance available will usually depend on the age of the asset and how long it is expected to remain useful.
Many Hire Purchase agreements can be settled before the original end date. Your lender can provide an early settlement figure based on the terms of your agreement.
The term depends on the asset and the lender. Some providers offer 12-to-84-month terms, although the term available to your business may be shorter.
You can use the asset throughout the agreement, but the finance provider remains the legal owner until the required payments have been made. Once the agreement is complete and any purchase fee has been settled, ownership transfers to your business.