Hire Purchase
How it works
An agreement would be prepared for a customer (the Lessee) to ‘hire’ the asset from Societe Generale Equipment Finance (the Lessor) for an agreed term in return for regular rental payments.
The ‘Title’ (or ownership) is retained by us until the final payment is made along with a normal ‘Option to Purchase’ fee.
Hire Purchase is suitable for any equipment your business wishes to own, and that may have a useful life beyond the finance agreement term. For example: printing presses, construction equipment, materials handling machinery, commercial vehicles and agricultural equipment.
Features
- Ownership at the end of the agreement subject to a nominal ‘Option to Purchase’ fee
- As the full VAT amount is due on commencement of the agreement the rental payments are not subject to VAT
- ‘On balance sheet’ financing agreement
- Capital Allowances can be claimed
- Payment structure agreed at the outset for easy budgeting
- Repayments can be matched to cash-flow and/or income stream
End of term option for the customer
Ownership can pass to the customer upon payment of a nominal ‘Option to Purchase’ fee and/or income stream.
| 3 year hire purchase agreement | |
| Asset Cost | £40,000 |
| Full VAT @ 20% | £8,000 |
| Less 10% deposit | £4,000 |
| Balance to finance | £36,000 |
| Amount due upfront (VAT + Deposit) | £12,000 |
| Followed by 35 monthly repayments of | £1,108.07 |
| = equivalent of £255.71 per week | The financing example shown above is for comparison and illustration purposes only. |