Hire Purchase

This is effectively a loan secured over the goods being financed. The customer will usually own the goods upon the final payment. The facility will appear on the customer’s balance sheet and capital allowances can be claimed.

Payments are calculated based on the full cost of goods, plus the appropriate interest and the full element of VAT [if applicable] is usually payable at the start of the agreement.

Typically Hire Purchase is used to fund assets with a good to strong residual value.