Hire Purchase
Hire Purchase allows you to spread the cost of acquiring machine tools by paying a deposit at the outset and further payments in installments. The asset can appear on your balance sheet.
With a Hire Purchase agreement, in addition to the capital deposit you negotiate, the full VAT on the value of the asset is normally payable upfront.
Arrangements can be flexible and calculated to match your cash flow. At the end of the term and upon paying an Option to Purchase fee, you enjoy the full benefits of ownership.
Potential Benefits
Option to own
Can be fixed or variable rate
Writing down allowances
Interest is tax allowable
Preserves other lines of credit
Easy to arrange
Flexible payment structures
TYPICAL EXAMPLE
Machine Cost | £50,000 + VAT |
Deposit | 10% + full VAT |
Balance | £45,000 |
60 Fixed payments | £937.50 |
600 Finance could also fund your VAT on a short term basis, until you have claimed and received the funds back from Customs & Excise. This benefit could significantly reduce the impact on your cash flow.