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| Commercial Financing - Hire Purchase |
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You pay the VAT due on the equipment at the outset and make regular fixed repayments over an agreed period. Once all repayments have been made you become the owner of the equipment.
For tax purposes you are treated as the owner from the outset of the finance agreement and can therefore claim any capital allowances available.
You are responsible for the maintenance and insurance of the equipment.
Key benefits of Hire Purchase:
- Certainty that the finance agreement cannot be withdrawn as long as you continue to abide by the terms and conditions of the contract. This contrasts with bank overdrafts which are repayable upon demand.
- The regular nature of repayments, and fixed interest rate, makes budgeting easier.
- A cost effective way to fund acquisitions. Using a traditional bank overdraft to fund equipment purchases can result in a growing hardcore of debt that can prove more costly to your business in the long run.
- Straightforward form of financing which leaves you in control of both the used equipment value and the claiming of capital allowances.
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