If you’re aiming to own a new company vehicle and are looking to spread the cost, a hire purchase package could be just what you need. Here’s how hire purchase works, and why it might be best for you.
At a glance
What is Hire Purchase?
Hire purchasing is a van financing option for those aiming to own the vehicle at the end of their contract.
Hire purchase requires you to put down an initial deposit, which is usually the full VAT followed by fixed monthly repayments. These repayments typically range between 24 and 60 months.
At the end of the contract or sooner, having paid all the payments outstanding plus any option to purchase fee, you will own the vehicle.
The Advantages of Hire Purchase
Hire purchase is the most popular finance option among Vanzone customers, and there’s a few reasons why:
- Ownership: Hire purchase is great for those looking to own a new vehicle without paying the whole cost upfront. Payments can be carried out monthly for the duration of your contract, and there’s always the option of ending the contract early with a full payment.
- Fixed Payments: Like most other financing packages, hire purchasing allows buyers to spread their payments across a longer period. As these payments go towards the cost of the vehicle, they are not subject to additional VAT on top.
- VAT Deposit: VAT registered customers can claim back the full deposit.
- Early Settlement: If after a while you are able to complete the vehicle purchase with one payment, you can do so with a hire purchase plan.
- Fewer Restrictions: As the vehicle is due to be yours at the end of the contract, hire purchases come with no mileage restrictions or servicing requirements.
- Tax Benefits: Hire purchase is a tax efficient finance option. To explore your options, give Vanzone a call.
The Disadvantages of Hire Purchase
Some of the disadvantages of hire purchase agreements include:
- No Hand-Back: With hire purchase, buyers are unable to return the vehicle in exchange for an early contract end.
- Full VAT Payment: For light commercial vehicles, buyers must pay the full amount of VAT up front.
- Higher Monthly Payments: Due to a lack of balloon payment, monthly payments on hire purchases tend to be higher than other options.
Should You Choose Hire Purchase?
If ownership is your goal but you’re struggling to pay outright, hire purchase is a great van financing option. Give us a call today and a member of our team will chat through all the options we have available.