What’s the difference between Hire Purchase and Lease Finance?
Hire Purchase Finance
Hire purchase finance is similar to lease finance however the biggest difference being that you have the option to purchase the asset outright at the end of your term. Paying for your asset in monthly instalments means that you can spread the cost across a period of time, make it easier to budget and allow more working capital to be available.
How exactly does Hire Purchase Finance work?
- The lender purchases the asset
- Funding is secured against the asset
- You will repay the finance company over an agreed term
- You will typically pay the VAT up front
What are the benefits of using Hire Purchase?
- You will be paying for the asset over an agreed period of time
- You will own the asset at the end of the agreement, and you can either keep it or sell it
- Hire purchase is available on assets that qualify for the Super Deduction Allowance
Lease Finance
Lease finance allows you to acquire the assets that you need to operate and expand your business without the cost of purchasing it outright which can have a negative impact on your cashflow. There are two types: Operating Lease and Finance Lease.
Operating Lease vs Finance Lease
Operating lease is a type of equipment lease where the customer rents an asset for a period of the item’s useful life.
Operating leases is simply terms means that you can rent an asset for your business over a short or medium term and you don’t take on the risks and rewards of ownership (e.g. maintenance costs).
Finance lease is when you rent an asset for the majority of the item’s useful life – they’re sometimes known as capital leases and you would take on most of the risks and rewards of the ownership.
What are the benefits of using Lease Finance?
Tax Benefits – Your monthly lease payments can be claimed as a revenue expense rather than capital expenditure and can be offset against corporation tax generating, giving you a healthy tax saving.
Retain Capital – Asset finance releases capital that would otherwise be tied up in a depreciating asset and allows you to pay the lease payments with the revenue generated from the property.
Affordable Payments – Rather than having to pay out large sums of capital, Asset Finance will allow you to pay an affordable amount each month over a period of time.
What do our clients have to say?
“First time working with Amplo and we’ll definitely be back! They arranged the lease finance for the furniture in our latest serviced accommodation project. The whole process was quick & efficient, with great communication throughout. We will 100% be using them again on our future projects. Thanks guys!”
Ollie Whitehouse – Google Review