Hire purchase

Quick facts

Hire purchase is a way for you to buy an asset by paying in instalments over a period of time, rather than paying upfront. With hire purchase, you legally own the asset after all the instalments have been paid, but in most agreements it will appear on your balance sheet from the start.

Hire purchase is a type of asset finance. It’s similar to equipment leasing, but simpler (and arguably less flexible).

Hire purchase is a bit like making a purchase and paying in regular instalments, like you might do for a new kitchen or furniture for your home. 

During the leasing period the provider owns the asset – and is therefore responsible for maintenance and insurance. 

Your business legally takes ownership of the asset after all the instalments have been paid, but in most agreements the asset will appear on your balance sheet from the start of the agreement. You usually pay a 10% deposit and all the GST upfront.

If you need access to equipment, you might want to look at other options. A finance lease is a similar long-term commitment but you won’t own the item at the end of term and the asset never appears on your balance sheet. You are however responsible for maintenance and insurance.

Another option is an operating lease.

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Disclaimer: Swoop Finance Pty Ltd (ABN 52 644 513 333) helps Australian firms access business finance, working directly with firms and their trusted advisors. We are a credit broker and do not provide finance products ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Swoop Finance Pty Ltd can introduce applicants to a number of providers based on the applicants’ circumstances and creditworthiness, we may receive a commission or finder’s fee for effecting such introductions. Swoop Finance Pty Ltd does not provide any kind of advice and in giving you information about providers products, we are not making any suggestion or recommendation to you about a particular product. Offers of finance are subject to a separate assessment process by the provider and subject to their terms and conditions. If you feel you have a complaint, please read our complaints section which is contained within our terms and conditions.

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