This option is not restricted to vehicle hire purchase only. It is a well established method of financing the purchase of all business assets. Under a Hire Purchase agreement the Hirer will pay an initial deposit, with the remainder of the balance and interest paid over a pre-determined period of time.
Any VAT on the asset is usually paid together with the deposit. The Hirer is normally entitled to recover any VAT and the Capital Allowances on the asset.
The Lender owns the asset until the final installment has been paid, together with a nominal purchase fee, at which point “Title” to the asset passes to the Hirer. |
