What is Hire Purchase / Finance Lease exactly?
Updated: May 20, 2020
For many business owners looking for finance, knowing what type you need is always the struggle.
Hire Purchase is a well-established method of financing for when business owners wish to eventually take ownership of the business assets they are financing. The finance company buys the asset on behalf of the customer, who pays an original deposit, then the remaining balance (plus interest) is then paid over an agreed period. Once the final payment is made, ownership transfers to the customer.
Under a finance lease, the finance company owns the asset throughout and payments are made over an agreed period. Customers are therefore renting the asset from the finance company and cannot sell the asset during their rental period. Often, there is an option to continue leasing at a reduced rate at the end of the contracted agreement.
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