Finance information
HIRE PURCHASE
An initial deposit plus the full VAT, if applicable, is paid leaving the balance to be spread over an agreed term, typically 1-5 years.
The finance company pays the supplier directly. Once the customer has paid the required regular repayments the ownership is transferred to the customer.
On all hire purchase agreements the asset is included on the balance sheet and depreciation and capital allowances are accounted for as if the asset were purchased.
THE BENEFITS OF HIRE PURCHASE
- The equipment is owned at the end of the agreement.
- Existing bank credit lines are not tied up.
- The agreement can be settled at any time.
- Rentals can be monthly, quarterly or seasonal.
- There are both fixed and variable rate schemes available.
- Hire purchase is suitable for both businesses and private individuals
FINANCE LEASE
An initial payment or advance rentals are paid leaving the balance, plus interest, to be spread over an agreed term, typically 1–5 years. The finance company pays the supplier and leases the asset to the customer under the terms of the finance agreement.
VAT is payable on the initial payments and all rentals.
The customer is not entitled to become the owner of the asset at any time but is entitled to sell the asset on behalf of the finance company at the end of the lease and typically keep 95% of the proceeds.
On all finance leases the asset is included on the balance sheet.
THE BENEFITS OF FINANCE LEASE
- Low initial outlay, typically the first 3 rentals.
- VAT payable monthly.
- Existing bank credit lines are not tied up.
- Rentals can be monthly, quarterly or seasonal.
