Hire Purchase (HP)
What is Hire Purchase?
You pay monthly over the agreed contract period of 12 to 60 months and then pay a nominal fee at the end of the contract and obtains legal ownership. The monthly payment is determined from the total value of the car plus interest divided by the number of months.
Often the finance company will expect all of the VAT for the whole value of the vehicle to be paid with the first installment, whereas with leasing the upfront payment is only the equivalent of three months payments.
Advantages Hire Purchase
- Often you can choose a fixed term and a deposit that fit your budget, these can be discussed and adjusted before a contract is signed, meaning you can design a facility that fits you and your circumstances. The longer the term of the agreement, the lower the payments will be each month. This flexibility means even if you can't afford to buy company vehicles outright, you still have the option of the acquire them.
- The rate of interest and monthly payments are fixed throughout the duration of the agreement, this allows you to plan outgoings and cash flow accordingly.