Hire Purchase/Lease Purchase:
- Customers pay an initial deposit or instalment, plus the full VAT if applicable, and the balance is paid over the remaining term – commonly 1 to 5 years.
- Instalments can be made monthly, quarterly, annually or seasonally.
- Once all payments have been made, legal ownership is passed to the customer.
- The asset is included on the customer’s balance sheet, and capital allowances can be claimed against taxable profits.
- Allows customers to purchase assets without the full capital outlay, and without tying up existing bank credit lines or overdraft.
