Hire purchase is a type of asset-backed finance that enables your business to buy capital-intensive machinery, vehicles and equipment by paying for it in instalments over time. An upfront deposit is paid, with the balance and interest then paid back over the term agreed.
While you physically possess and control the business asset throughout the term, the finance company is the legal owner. Once all the hire purchase instalments have been paid then you become the owner – the asset is all yours and appears on the balance sheet accordingly.
Whether this very flexible type of asset-based finance suits your own business will depend on a number of factors, including: the asset resale value; how long you need the asset, the asset’s rate of depreciation and the speed of technological evolution in the asset type for example.