What is a Hire Purchase Agreement?
A Hire Purchase Agreement is a form of asset finance which provides a way for your business to buy new assets and spread the cost over a period of time, typically the useful economic life of the asset you are purchasing. A Hire Purchase Agreement would involve your business paying an initial deposit and then paying the remaining balance in instalments, gaining full ownership of the asset upon final payment. By using a Hire Purchase Agreement, your business can acquire new assets without suffering a dent in cash flow.
The benefits of a Hire Purchase Agreement
- A cost effective solution – A Hire Purchase Agreement can provide a cost effective way to purchase assets.
- Assets will appear on the balance sheet – Assets purchased using a Hire Purchase Agreement will appear on your businesses balance sheet even before you have paid the final instalment. This may make them eligible for use as security against loans and other means of finance, as well as increasing your business’s value, making it more attractive to investors.
- Preserves vital cash flow – By spreading the cost over a period of time rather than paying it all at once, you avoid the sudden drop in working capital which could potentially cause problems for trade.
- Can allow tax benefits – in the eyes of the tax authorities, assets bought through a Hire Purchase Agreement belong to you from the beginning of the process. This means they may be eligible for certain tax relief, such as capital allowances.
- Gives your business access to superior equipment – Using a Hire Purchase Agreement to fund the acquisition of business assets can mean that your business is able to access more expensive equipment than if paying outright.
- Can allow for simpler forecasting – The instalments for a Hire Purchase Agreement will be fixed and spread out over a set period of time, allowing for simple budgeting and easy cash flow forecasting.
Who is a Hire Purchase Agreement for?
A Hire Purchase Agreement is designed for businesses of all sizes looking for a way to buy new capital assets in a way that preserves cash flow, or who are looking to gain access to more expensive assets through paying in instalments. The variety of assets that a Hire Purchase Agreement can be appropriate for is extensive and they are appropriate for most industries.
How can Wffinancesolutions.co.uk help?
The range of lenders offering Hire Purchase services is vast and the subtle distinctions between them can be the difference between getting a good deal and getting a product that is inappropriate for your needs. Wffinancesolutions.co.uk understands the ins and outs of these subtleties and has years of experience to call upon in order to source you a solution that not only fulfils every requirement, but at the best possible price. For a free, no obligation consultation, get in contact with one of our advisors today.