If you’re in the market for a new piece of equipment for your business, whether a vehicle or factory equipment, it’s likely that you won’t be able to buy it outright.
This is where a hire purchase or lease purchase agreement can come in handy.
Some people use these two terms interchangeably but in reality, they are two different types of asset funding.
As independent financial brokers, we want to ensure you have 100% transparency when it comes to understanding the asset funding options available to you.
Read on to find out more about hire purchase and lease purchase options. Which choice is the right one for your company?
What is a hire purchase?
A hire purchase is ideal if you want to own the product at the end of the payment terms.
You pay an upfront deposit and make fixed monthly payments over a set time period.
While you’re making payments, the finance company will officially own the product. If you’re unable to make payments, they can take it away.
When the final payment is made, ownership of the product will transfer over to you.
What is a lease purchase?
A lease purchase (sometimes just referred to as leasing) is an alternative to a hire purchase. It’s ideal if you’re interested in the latest product but have no interest in owning it at the end.
With a lease purchase, you make payments over a set time period in the same way you would with a hire purchase. Typically, these payments are smaller as you’ll not own the product at the end of the deal.
Once the time is up, you hand the product back to the finance company. You then have the option to walk away or start another lease purchase.
Lease purchases are commonly used with company vehicles. Businesses lease cars and vans for a set amount of time and at the end, trade them in for the latest model.
Is a hire purchase or lease purchase right for me?
It ultimately depends on whether you want to own the product. If you do, then a hire purchase is the best option. If you’re not interested, then it might be that leasing may work out cheaper.
You also need to take the product you want and the budget you have available into consideration.
If you want to know more about your options when it comes to asset funding, get in touch with us.
Our team have over 80 years of experience and is dedicated to providing you with a tailor-made financial solution. After all, no two businesses are alike.
Plus, as we’re independent finance brokers, you have the peace of mind that the options suggested to you are best suited to your requirements.
Contact our finance specialists today and take the first step towards growing your business.