Looking for van finance and want to own the van at the end of the contract? You will probably be looking for hire purchase. Leasewell reveals everything you need to know about hire purchase.
Hire Purchase (HP)
Selecting a new vehicle is an exciting time, however it can also be stressful, with you needing to take into consideration several factors including load volume, fuel type, fuel economy to name just a few. Then it comes to financing the vehicle, where do you even start? There are several vehicle finance options available including finance lease, contract hire, flexible lease, lease purchase and hire purchase. Deciphering between all of these and understanding which of these is best for your requirements or the requirements of your business can be a minefield, that’s why in this article Leasewell takes a closer look at one of the most popular ways to finance your new van or car, hire purchase (HP).
As far as vehicle finance goes, hire purchase is the least complicated, you firstly pay an initial payment (or deposit), then the remainder of the balance is split equally over a period of your choice (2,3,4 or 5 years), with payments agreed at the beginning of your finance agreement. Hire purchase tends to be the most expensive type of van finance as you get to keep the van at the end of the term, whilst it also usually requires a higher deposit than other finance methods (usually the full VAT of the vehicle).
By spreading the purchase of a new van over several years, you can manage your budget for the van which also appears as an asset on your balance sheet.
Unlike a leasing agreement, the residual value of the vehicle at the end of the contract is not considered with hire purchase. Your monthly payments are determined by the price of the vehicle, the amount of deposit you have paid and the length of the term. So monthly payments would tend to be lower if taking the agreement out over a 5-year term, than over 3-year term.
There are also no mileage restrictions in place with hire purchase, so you can do as much or as little mileage as you require, as the vehicle is technically yours there are also no restrictions on sign writing or modification of the vehicle however you wish.
If your business is VAT registered then the VAT deposit can be reclaimed, you can then off-set 100% of the interest charges against taxable profits and interest is then reclaimed against your tax bill.
No fleecing, Just Leasing
Looking for a bargain on a new vehicle? Your search is over! At Leasewell we have a massive range of new cars and new vans for sale with a range of cheap finance options available depending on your requirements. Interested? Simply submit your details online or call us on 01656 337337 to get the ball rolling today!