Our tailor-made solutions

(HP) Hire Purchase

• Straightforward and extremely popular
• Allows you to pay for an asset in instalments over a set period
• Usually at a fixed interest rate (a limited number of finance companies will consider variable interest rates) and you own it at the end of the term
• Your payments (including a possible balloon payment option at the end of the contract) will cover the original cost of the asset plus interest charges
• Although your business won’t own the asset until the final payment is made, taxation and accounting treatment will apply as if you had already purchased the item

(FL) Finance Lease

• Perfect if you require an asset for a set length of time and ownership is not required
• The finance company holds the ownership of the asset throughout the agreement, but your business will get exclusive use of it
• These payments will cover the original cost of the asset plus interest charges
• At the end of the term, you may be given the opportunity to extend your lease by paying a peppercorn annual rental or you can sell the asset to a third party (details of the sale and sale price must be approved in advance by the finance company). The finance company will retain a small percentage of the sale price

(CH) CONTRACT HIRE

• This is the term used to describe the most common form of operating lease for cars and commercial vehicles. As with the leasing of other assets, you pay a fixed monthly amount for a set period of time for the use of the asset. There is usually an initial deposit to be paid, equating to a certain number of months’ rental
• Your repayments are calculated on the value of the asset and the projected resale value (residual value) at the end of the lease agreement, also taking wear & tear and mileage/hours worked and depreciation into account
• Contract hire has become very popular over the years, largely because it provides a great deal of certainty over the cost of running a good-sized fleet, especially when the agreements include the cost of maintenance