Hire Purchase is Helping UK Drivers in Tough Times

Get yourself more leg space amid looming economic crisis with the traditional financing alternative, Hire Purchase offering you to drive the wheel of your choice at an affordable price.

If you are looking to buy a car or commercial vehicle outright then Hire Purchase could be the answer for you. This form of finance is more popular with companies or individuals who do not change their vehicles too frequently.

Hire Purchase requires you to make a fixed monthly repayment for a stipulated period of time. As the loan is secured on the vehicle, you would not be able to acquire ownership, if you get behind on your repayments. But once the full set of finance payments has been made the asset is owned outright.

Hire Purchase is a structured straightforward repayment facility. The customer puts down a pre-agreed deposit and the balance is spread over the agreed period of the loan. Factors determining the amount of the monthly repayment include the amount of down payment, the period of the agreement and the selling price of the vehicle. The amount of deposit you are able to pay and a longer period of contract drives down your monthly repayments substantially.

Typically the registration fee and road fund license, maintenance of the car/van, insurance and other operating costs are borne by the Hire Purchase agreement holder himself.

In case of company vehicles, usually the interest on payments is allowable against tax and you can also write down a proportion of the vehicle value against profits.

Hire Purchase agreements are best suited to individuals receiving monthly car allowance as they can use a portion of the allowance to provide funding for the monthly repayments.

Following are the key features and benefits of a Hire Purchase agreement

• If you are a business then the asset appears on your balance sheet.
• With ownership you have total control over the asset.
• Hire Purchase agreement allows greater borrowing limit
• Business ownership normally carries the potential of writing down allowances.
• For businesses, VAT on the cost of the asset is normally reclaimable*.
• Hire Purchase offers the benefits of fixed interest rate.
• If the vehicle is being used for business, interest element of repayments can normally be offset against taxable profit.
• Hire Purchase facilitates cash flow, budgeting and planning
• There's no mileage contract

With a fixed monthly outgoing, Hire Purchase makes expensive vehicles more affordable to you, without disrupting your budgeting.