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Hire Purchase is the traditional method of funding vehicles for both businesses and private individuals. It is also the most straightforward method where the customer gains ownership after all of the payments have been made. Hire Purchase is a finance agreement where the initial payment is usually equivalent to 10% of the cost of the vehicle, followed by fixed monthly payments for the duration of the agreement. Periods can normally be arranged for anywhere between 12 and 60 months. However, when compared with other funding methods over similar periods, monthly payments will be considerably more expensive, as the total cost of the vehicle (plus interest) is being repaid. However, despite higher monthly payments Hire Purchase may be a good idea for anyone who is not concerned with the cashflow implications or who plans to keep their vehicle for a long time, i.e. 5 years or more. Under a hire purchase agreement, vehicles appear on a company's balance sheet as an asset of the business. Therefore capital allowances are applicable, so an annual writing-down allowance of 25% per annum (capped at £3,000 per annum) can be off-set against taxable profits, in addition to all interest charges and a balancing allowance (the difference between the written-down value and the sale price) when the vehicle is disposed of. << Back to Business Customer Solutions
Quote Line: 0845 166 2405 |
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