Hire Purchase

How does Hire Purchase/ Lease Purchase work?

Hire or Lease Purchase are other options to consider if it is essential to retain your vehicles as company assets. With these options, all the risks of owning and running the fleet therefore remain with you. These are straightforward payment facilities whereby you ultimately own the asset. A variety of options are available, based on fixed and variable rates. Repayments are flexible too, and can be based upon a larger initial payment and/or a final ‘balloon’ payment.

The benefits of Hire Purchase/ Lease Purchase

Your initial outlay is lower than purchasing outright for cash.

The vehicle appears as an asset on your balance sheet.

Ownership entitles you to claim capital allowances.

You choose between fixed or variable interest rates.

The interest on repayments can usually be offset against taxable profit. However, the following points must also be considered.

The whole cost of the vehicle is fully spread over the life of the contract, potentially leading to higher monthly repayments.

VAT is not recoverable on the purchase price of the vehicle.

All risks of ownership, administration, running, maintaining and disposing of the fleet lie with your company.

Additional services such as maintenance and RAC cover are not included, therefore internal fleet administration resources may be required.

The additional cost of any third party fleet management must be taken into consideration.