Hire Purchase
Hire Purchase is similar to a car loan as you would pay for the whole amount of the vehicle over a fixed period of time. For example, if the car costs £10,000 you would simply agree a period of time over which to pay the £10,000 back, interest is added at the outset and then the total amount is divided equally over the repayment period. When you have finished making the payments the vehicle is owned outright by you. A deposit is usually required which would reduce the amount you borrow.
The key features of Hire Purchase are:
- Eventual ownership of vehicle
- Fixed interest rates from the outset
- Flexible deposit amounts
- The car can be written down in your books-for businesses
- All interest paid can be off-set against tax-for businesses
- No balloon payment
- No mileage restrictions
- Option of early settlement
- Repayment periods of 12 to 60 months
- No VAT on payments
