{"id":2819,"date":"2020-03-23T17:19:34","date_gmt":"2020-03-23T17:19:34","guid":{"rendered":"http:\/\/localhost\/2020\/swoopMW20\/?post_type=knowledge-hub&p=2819"},"modified":"2022-11-01T18:00:32","modified_gmt":"2022-11-01T18:00:32","slug":"hire-purchase","status":"publish","type":"knowledge-hub","link":"https:\/\/swoopfunding.com\/ca\/knowledge-hub\/hire-purchase\/","title":{"rendered":"Hire purchase"},"content":{"rendered":"\n
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\n \n What is hire purchase? <\/a>\n <\/h5>\n <\/div>\n\n
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Asset finance is a type of lending that gives you access to additional business assets (e.g. equipment). There are two main types of asset finance:\u00a0equipment leasing<\/a>\u00a0and\u00a0hire purchase<\/a>.
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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.<\/p>\n <\/div>\n <\/div>\n <\/div>\n

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\n \n Why choose hire purchase? <\/a>\n <\/h5>\n <\/div>\n\n
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Hire purchase is a type of\u00a0asset finance<\/a>. It\u2019s similar to\u00a0equipment leasing<\/a>, 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.\u00a0

During the leasing period the provider owns the asset \u2013 and is therefore responsible for maintenance and insurance.\u00a0

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 VAT upfront.<\/p>\n <\/div>\n <\/div>\n <\/div>\n

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\n \n Is it suitable for an SME? <\/a>\n <\/h5>\n <\/div>\n\n
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If you need access to equipment, you might want to look at other options. A\u00a0finance lease<\/a>\u00a0is a similar long-term commitment but you won\u2019t 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\u00a0operating lease<\/a> –\u00a0An operating lease is a type of\u00a0equipment lease<\/a>\u00a0where your business (the lessee) rents an asset for only a fraction of the item\u2019s useful life. Contract hire is a specialised form of\u00a0operating lease<\/a>. It refers exclusively to the leasing of vehicles and is therefore often called vehicle asset finance.<\/p>\n <\/div>\n <\/div>\n <\/div>\n

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\n \n Have you also considered? <\/a>\n <\/h5>\n <\/div>\n\n
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If you are facing a large one-off payment to access equipment, machinery or vehicles, you might want to consider asset finance as an alternative to traditional bank loans or overdrafts.

The two main types of asset finance are:\u00a0

equipment leasing<\/a>\u00a0(including finance leases,<\/em> operating lease and contact hire) – Equipment leasing allows your business to rent equipment from either a vendor or a leasing company, for a set period of time. It\u2019s a type of\u00a0asset finance<\/a>. At the end of the lease, you must give back the equipment, buy it or renew the lease. Equipment leasing includes\u00a0finance leases<\/a>\u00a0(also known as capital leases),\u00a0operating leases<\/a>\u00a0and contract hire.
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You might also consider\u00a0asset refinance<\/a>, which allows you release cash from the value in your existing assets.<\/p>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n \n