Business finance
Hire purchase
A hire purchase agreement will allow you to spread out the payment of a large asset over time, avoiding the one time cash outlay that a large investment would normally create.
Loan size
$5K To $2M
loan term
1 to 5 years
Interest rate
5% to 15%
Approval speed
Medium/Fast
Hire purchase
Key features of a hire purchase
In a hire purchase agreement, the lender purchases an asset, a piece of equipment or machinery and grants you, the borrower or hirer, the right to use it immediately and to buy it over time through progressive instalment.
The instalment include both interest and principal payments so that once the final payment is made, you will own the asset outright.
Compare a hire purhcase
Advantages and disadvantages
Advantages
What are the advantages of a hire purchase
- Access to asset without initial cash outlay
- Straightforward application process
Disadvantages
What are the disadvantages of a hire purchase
- More expensive than loans secured by property
- Deposit required upon lease set-up
Common uses & good to know
Everything else about a hire purchase
Common uses
A hire purchase agreement is commonly used for sizeable, capital intensive investments in machinery, plant or equipment.
You can often structure the payment calendar to suit your needs, whether that is larger instalment payments or a large balloon payment at the end of the lease term.
The GST paid on rental and other charges may be eligible for tax credits.
Good to know
You will not own the asset until the end of the payment period and you may be required to pay a deposit upon set-up of the agreement.
Only the interest portion of the payment instalments is categorized as expenditure for tax purposes.
Any and all repairs and maintenance of the piece of equipment are the responsibility of you the hirer.
Alternative Commercial Lending options
Other Business Finance Products
Secured Business Loan
A secured business loan is a loan made by a bank or finance company where the lender requires the borrower to pledge assets as collateral against the loan.
Unsecured business loan
Unsecured business loans are loans made without requiring business collateral such as property or inventory.
Trade finance
Trade finance is any form of finance that is issued to support international trade, including letters of credit, debtor finance, & export credit.
Using Debtor Finance to Manage Business Cash Flows
Any business owner knows the importance of managing cash flows to ensure that liquidity remains strong and that the business has the ability to take advantage of sudden growth opportunities or big contracts Late payments impact businesses severely as cash that could otherwise be reinvested in growing stock marketing or
Hire purchase FAQ
Frequently asked questions
As is the case for a finance lease, the fact that the lender takes the asset as collateral means that they may be more flexible in terms of your operating history, credit score etc.
