A simple, straightforward product
VAT is paid upfront and you make your own arrangements for maintenance, repairs, and servicing.
The advantages of hire purchase
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Tax advantages
As well as reclaiming VAT (if VAT registered), you may be able to claim capital allowances and offset repayment interest against profits.
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A finance structure to suit you
With a flexible deposit, fixed or variable payments, and the option of a final balloon lump sum payment at the end of the agreement, you choose how the finance is structured.
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Secure ultimate ownership
You have the right to buy the asset at the end of the agreement term.
What is hire purchase?
Hire purchase is a type of finance product that allows businesses (and individuals) to spread out the cost of buying an asset over several monthly payments.
With this product, we purchase the asset on your behalf and create a tailored repayment plan to suit your budget.
At the end of the agreed term, you take ownership of the asset for a nominal fee.
Arranging a hire purchase
We work with our intermediary partners to help SMEs access our range of asset finance products. If you're an Aldermore customer, please speak to your existing asset finance intermediary.
If you don't have an asset finance intermediary, request a call from one of our experts.
How does hire purchase help in different industries?
Hire purchase is usable in all sorts of sectors and industries for various reasons. The tailored nature of each agreement means that no two hire purchase contracts are the same, which makes hire purchase an incredibly flexible option.
Fixed rate vs variable rate hire purchase
Fixed rate hire purchase
With this option, there are no sudden increases (nor decreases) to the amount of interest payable. You know how much you will need to pay throughout the contract length before you sign on the dotted line.
Fixed rate agreements are better suited to businesses that are looking to budget and financially plan for the duration of their contract.
Variable rate hire purchase
With a variable hire purchase agreement, the interest rate fluctuates depending on the Bank of England’s base rate. This, in contrast to a fixed rate hire purchase, means that the amount you pay can go up or down.
Not sure if hire purchase is right for you?
We offer a range of flexible finance options where you can make regular repayments over an agreed period to suit your needs.
Discover our full asset finance range to see if there is something more suitable for you.
Hire purchase FAQs
Once you’ve determined that your business needs a new asset, the hire purchase process begins with you submitting an application to us. In this application, be sure to detail what it is, how it will be used, and its value.
We then set a deposit for you to pay (which is usually around 10% of the value of the asset), purchase the asset for you, and ask for monthly payments to be made in return for hiring the asset over an agreed period. These payments will cover both the interest you owe, as well as the cost of the asset itself.
Once you’ve made your final payment, a final nominal fee will be payable for you to become the official owner.
Hire purchase agreements can be ended early, but doing so will result in a settlement charge.
Given that the cost of a hire purchase agreement will depend on the value of the asset being hired, there is no firm answer on exactly how much it’ll cost.
Hire purchase allows costs to be spread out, but an upfront deposit will be required in the beginning.
‘Conditional sale’ is very similar to hire purchase, aside from the fact that the customer automatically becomes the owner of the asset at the end of a conditional sale, with no final fee to be paid.
If you haven't been able to find the information you need and you'd like some support from us, we'll be happy to help.
Haven't found what you're looking for?
View all asset finance FAQs
Award winning asset finance
We're proud to have been recognised for a number of industry awards:
- NACFB Commercial Lender Awards 2023 - Asset Finance Provider of the Year.
- LeasingWorld Gold Award Winners 2022 - Top Green Asset Funder.
- LeasingWorld Service Excellence Awards 2022 - Winner.
- LeasingWorld Gold Award Winners 2021 - Business Finance Champion.
T&Cs will apply, subject to status and affordability. Any asset used as security may be at risk if you do not repay any debt secured on it.